How did the beef sector actually fare out in 2018?
The abnormal weather conditions that swept the country in 2018 prolonged the winter period. Then, to make matters worse, the summer drought ceased grass growth on beef farms and added additional costs in terms of concentrate supplementation.
However, a good back-end weather wise has allowed farmers to fill the fodder gap in many cases.
On Tuesday last (December 4), Teagasc released its Annual Review and Outlook 2019. Speaking on Tuesday, Teagasc’s Jason Loughrey said: “What you will find from the analysis is that the impact of the weather conditions had a huge impact on margins.
“Therefore, the net margin comes to a clearly negative outcome for 2018. We’re hoping that in 2019, normal weather conditions will return and we will see an improvement in margins.”
According to Teagasc’s Annual Review and Outlook 2019 – in 2018 – a 10% decrease was witnessed with calf prices. In addition, R3 steer prices rose 1% on 2017 levels, while weanling and store prices are down 3% and 8% respectively.
As already mentioned above, the difficult weather conditions in spring and summer led to lower grass availability than in 2017 and fertiliser prices are up 7% on last year’s levels. In addition, fertiliser usage jumped by 10% when compared to 2017.
Due to the weather conditions, feed usage soared by 30% and prices for feed increased by 5%. Direct costs are up 1% on 2017 figures and fuel prices have jumped by 10%.
In addition – according to Teagasc – total input costs have increased significantly.
Looking at suckler enterprises, gross margins are forecasted to fall 19% on 2017 levels, while those farmers running cattle-finishing operations are projected to have gross margins decreased by 11%.
So, with the reduction in gross margins, where does that leave net margins? For farmers involved in suckler enterprises, a negative net margin of -€104/ha is expected.
- Gross margin: -19%;
- Net margin: -€104/ha.
On the cattle finishing front, a negative net margin of -€72/ha is forecasted.
- Gross margin: -11%;
- Net margin: -€72/ha.
Continuing, he said: “The slaughter numbers indicate that prime cattle supplies are up 2%, but that’s largely due to increases in the heifer kill and animals being killed out at a lower weight.
“Looking at steer prices, for the first four or five months of this year, prices were higher compared to the same period in 2017. The summer drought led to changes in the EU market. The increase in supply of cow and heifer beef led to a sudden drop in beef prices.”
Touching on live exports, he said: “Live exports are also very important because they affect beef prices. The biggest increase in 2018 was on the calf front, rather than weanlings or stores; over 50,000 extra calves were exported in 2018.”
The BDGP is an agricultural scheme which was launched in May 2015 and is designed to improve the genetic merit of the suckler herds and reduce greenhouse gas emissions from the Irish beef herd.
Teagasc has estimated that the average suckler farmer – involved in the scheme – will receive a payment of €44/ha from the BDGP in 2018.