Beef farmers gathered at Kilkenny Mart on Tuesday (September 13) for the Teagasc winter beef-finishing information event.

One of the speakers on the evening was Kepak Group’s procurement manager Jonathan Forbes, who gave a market insight from both his personal point of view and the Kepak perspective.

Farmers at the event listened attentively to the procurement boss who is a major player in the Irish livestock business, overseeing the purchase of over 280,000 cattle as well as 650,000 sheep for Kepak’s operations in Ireland.

As well as this, Forbes manages the Kepak farm in Clonee, Co. Meath, which finishes 3,500-4,000 cattle/year.

Kepak processes approximately 500,000 cattle, 1.7 million sheep, and close to 400,000 pigs across its UK and Irish operations.

Supply

Commenting on national cattle supply, Forbes said that up to last week, over 96,000 additional cattle had been processed (including veal) this year, which is an 8.7% increase on last year.

“The prime kill is up 6.1%, the cow kill is up 15.5% and veal plus bulls are up 21%,” he said.

Forbes, Kepak Farmers , beef
Kepak Group’s procurement manager Jonathan Forbes

Bord Bia, he added, has projected the national cattle throughput to increase by 119,000 cattle.

“We’re looking at an average weekly throughput of 36,000 cattle until the end of the year,” he said.

“Some weeks there will be more cattle and some weeks there will be less cattle.”

He added that next year, cattle supply is projected to fall by 2% and said: “Kepak’s focus is to work with suppliers to ensure we have beef to meet our customers’ demands in the first six months of 2023.

“That’s how it work’s, we don’t switch on and off, it’s a 52-week continuous supply arrangement.”

Because of current costs and risk, Forbes believes beef finishers “will stay close to the market” when making decisions on keeping cattle.

He believes finishers will stay “within 60 days of slaughter” where they have a better view of the market and can switch on from there.

“When I started procurement 20 years ago, I bought R-grade steers at £1.96/kg. Now, we’re at close to the €5/kg mark. In 20 years, that’s where we’ve come.”

“There’s less beef imports coming from non EU-countries and there’s increased global demand from world markets. Asia is taking the beef from south America and Australia and this is displacing it from coming into Europe,” he said.

Steak slow but mince sales ‘skyrocket’

Forbes told farmers in attendance at the information evening that the demand for minced-beef products “has skyrocketed”.

“The demand for manufacturing beef has sky-rocketed and there’s a reason for it. Consumers are moving to cheaper beef; they’re moving away from steak cuts, the striploin and fillet in value terms are back about 15% year on year,” he said.

He continued: “So, you’re wondering how we’re paying more for beef. The round cuts are about ‘stand on’ and rib cuts are within 1-2% in terms of value.

“The manufacturing part of the carcass is the part that has compensated on the value return of the carcass vs. last year.

“It’s because consumers have traded down. They’ve moved from steak cuts to manufacturing meat.

“The burgers, mince and meatballs has carried the cost of the animal and given the 19% increase in carcass value. That’s a trend I personally see continuing as well”.

Giving his own views, Forbes said he expects the demand for manufacturing meat in retail and food service to continue to increase.

He explained that there is a reduced consumption of steak meat as consumers trade down and said at certain times this year, “significant volumes of steak” were in cold stores and sales teams had to wait for “the right opportunity to move some of that”.

“The grey area is how many people are going to eat steak over the next 7-8 months and I’m pretty sure the market will be for burgers and mince.”

Customer spec

Despite the current trends in the trade, Forbes affirmed the importance of customer specifications for beef carcasses, saying: “We’re dealing with the top-end retailers in Europe and we want to give them the best beef to retain and build this business.

“We’re looking for the perfect-spec animal at Kepak to service these retailers and this comes from the quality finish that’s put on cattle.

“A carcass grade of O= or better with a fat score of between 2+ to 4= is still our business, what we want hasn’t changed.”

Forbes mentioned the impact of recent world events on global supply chains and said customers of Irish beef are seeking “resilient supply chains” and need “more consistency and certainty.

Because of this, he explained that Kepak “needs more certainty and consistency” from the suppliers they work with.

Integrated systems

He told farmers at the information event that he believes “the people who can come up with the best integrated supply chain that offers certainty to both the farmer and customer will achieve the most.”

He said that each player in the supply chain wants specific assurances.

“The farmer wants a good calf and a level of certainty on input prices as well as a minimum price assurance or a market-plus price,” he said.

“The processor wants consistent quality that will meet the customer spec.

“The customer wants supply certainty, market spec and sustainability while the consumer wants sustainability, value and meat-eating quality.”

Forbes believes that models, such as Kepak’s Twenty20 Beef Club, that offers a market-plus price are the future of beef production in Ireland.

“That’s the policy we have and we want to improve sustainability for the 20,000 farm families we work with,” he siad.

“Ireland has a massive reputation as a resilient beef supplier and we need to collaborate to come up with solutions to work better together.

“Kepak believes we have to move away from the model where the farmer feels they are a price taker towards more supply-chain partner roles and bring more certainty to it.”

Commenting on demand, he said: “I need 5,500 -6,000 cattle/week. We have contracts of supply but we may not have contract prices so we need beef to supply our customers.”

Cattle movements

Forbes told farmers that 88% of the cattle processed at Kepak has two farm residencies or less.

“When we analysed the cattle movements, we could see that zero-move cattle were the youngest in terms of age at slaughter followed closely by one and two move cattle,” he said.

“When we went to three and four-move cattle, the age went up and the carcass weight dipped.”

Beef price forecast

Commenting on the beef price winter finishers can expect this season, Forbes was quick to affirm: “I can’t predict the future on price but I can say the short term is very positive, as it is now, and a short finish is the only finish that’s going to work this winter.

“I have no reason to have any doubt why the [beef] market isn’t going to be strong, particularly April, May and June. I believe supply will be tight then because it has always been.”

He advised beef finishers to “stay close to the market and have cattle in a position that you can switch on 60 days out from finishing and you have a view of the market. That’s the only advice I can give you this evening.”

Dairy-beef

Forbes explained that “there’s a massive divergence” in the beef cattle that are coming from the dairy herd.

“Dairy-beef is some of the best beef we’re processing because of the way its finished and the age it’s finished at but there’s is a problem with the dairy-dairy bull and it’s a problem for the industry,” he said.

“We also have a challenge around calf rearing. If we look at the stats from the past five years, only 40% of the people who reared dairy calves five years ago, continue to rear dairy calves.

“That’s a challenge for the sector and it’s one the meat industry can work with the dairy industry to find solutions for.”

Forbes responded to a comment from one farmer in the crowd on the low level of young people involved in the sector and he acknowledged: “It’s a problem for us getting people into the sector.

“In Kepak, we’re trying to come up with new ideas and solutions to give young people a road map and more certainty to stay producing beef but we haven’t the silver bullet to give people contracts.”

The event drew to a close at approximately 10:30p.m and other speakers on the night included the Irish Farmers’ Association’s livestock chairperson, Brendan Golden, as well as Teagasc’s Paul Crossan and Mark McGee.