Analysis: Why the 100,000-head Turkish contract is out of the reach of Irish exporters

A tender for 100,000 finished bulls has been offered by the Turkish government. Although it’s open to all “domestic and foreign bidders”, it appears that the tender will be out of the reach of Irish exporters.

Turkish authorities require finished bulls – between 12 and 24 months – that weigh more than 450kg. Beef breeds, such as Charolais; Limousin; Angus; Hereford; Belgian Blue; Blonde d’Aquitaine; Saler; Simmental; and Aubrac, are required. The only dairy breeds permitted are Brown Swiss and Montbelliard.

A closer look at the tender’s terms and conditions suggests that it will be extremely difficult – and nearly impossible – for Irish based-exporters to submit a successful bid.

Firstly, the sheer volume of finished bulls required will be challenging for any individual Irish exporter to gather. Last year, over 195,000 young bulls (under 24 months) were slaughtered in Department of Agriculture approved beef plants.

A large proportion of these animals were slaughtered under agreements between farmers and factories, where a price was agreed before animals were transitioned onto finishing diets.

young bull

What makes this process even more difficult is the fact that a single exporter must take on the might of specialised bull processors to secure numbers from a relatively small subset of animals.

This comes as the tender states that “no bids can be submitted in the form of consortium”. This essentially means that a separate entity must be created if some of the bigger Irish exporters wanted to join forces and apply for the tender.

Seasonality of bull production

The seasonality of young bull production in Ireland must also be factored into the equation when we look at the strengths and weaknesses of the current tender.

As stipulated, the 100,000 bulls must be shipped in six lots. The lowest number required in any individual shipment is 10,000 head; the largest is 20,000 head.

Cattle delivery dates:
  • 20,000 cattle – April 15 to May 15 (31 calendar days);
  • 20,000 cattle – May 15 to June 15 (32 calendar days);
  • 20,000 cattle – June 15 to July 15 (31 calendar days);
  • 15,000 cattle – July 15 to August 15 (32 calendar days);
  • 15,000 cattle – August 15 to September 15 (32 calendar days);
  • 10,000 cattle – September 15 to October 15 (31 calendar days).

Looking at last year’s beef kill, we can clearly see that young bull slaughterings peaked during the months of December, January and February.

A peak was also evident during the months of May, June and July. This suggests that – if successful in bidding for the contract – Irish exporters would find it challenging to fill the contract during the months of April, July, August and September.

Unlike the feeding cattle exported under previous government tenders, the finished bulls will not have to undergo a quarantine period. This poses further challenges when it comes to sourcing stock. In addition, the numbers required far exceed the housing/holding facilities of any individual exporter operating in Ireland.

Furthermore, it must be noted that no vessel with a capacity to carry 20,000 bulls currently services Ireland. If successful, Irish exporters would need to charter a number of smaller vessels to ensure that the animals arrive within the permitted dates.

Currency worries

The tender also states that the cattle will be purchased in Turkish Lira. Previous contracts secured by Irish exporters where based on either euro or US dollar payments.

Although this stipulation accounts for a very small part of the tender’s wording, its significance to Irish exporters can not be underestimated. If an Irish shipper is successful, the individual exporter will carry the burden of any potential swings or fluctuations in currency.

One prominent exporter told AgriLand: “We’d be better off buying currency if we wanted to take that risk and we wouldn’t have to worry about gathering a huge number of bulls.”

Moreover, the successful bidder will have to put forward a bond of “no less than 3% of the price they have offered”. On 100,000 cattle, this figure sits in the millions rather than the thousands.

For talk sake, at a price of €1,800/bull and a 3% bond, the successful bidder will have to front up €5.4 million before even sending an animal to Turkey.

Who’s in the driving seat?

Given the sheer scale of the tender, exporters from South America are positioned firmly in the driving seat when it comes to submitting a successful bid.

However, one of the larger European exporters – with representatives working in Ireland – may be able to secure part of the contract. If this is the case, a number of fat bulls could be sourced from Ireland, along with other European countries, to assemble the cattle.

In addition, Irish exporters may be able to secure part of the tender. If successful in doing so, it means that the numbers exported will fall way short of the 100,000 head offered in the current tender.