No ‘silver bullet’ solution to beef income crisis – but what aids could help?

There is no “silver bullet” to solving the income crisis in the beef sector – but possible aspects which may remedy the cash issue are being explored, according to Teagasc.

At the Teagasc Annual Review and Economic Outlook for 2020, held in Teagasc Ashtown, Co. Dublin, yesterday morning, Tuesday, November 26, Teagasc specialists were asked:

“If the beef industry is so unprofitable at the moment, and potentially going to be devastated by Brexit, is it time where we should perhaps be looking at encouraging beef farmers out of beef production – or is there a solution?”

Though no direct solution was put forward, two possible financial aids were highlighted by experts, namely direct payments and forestry.

Commenting on the matter, Kevin Hanrahan pointed to the recent Beef Emergency Aid Measure (BEAM) in noting that, while money was there for assistance, because of the terms attached, many farmers were reluctant to avail of it.

Payments

“I think the experience with the BEAM may be informative a little bit in that it came with a legal tag on it: You had to do things to get the extra payments.

“That was the 5% reduction in organic N – basically a destocking (requirement).

If direct payments are the solution to the farm income problem it seems likely, though maybe not certain, that they will come with some sort of requirement for farmers to de-intensify or cease their production.

Dr. Hanrahan stressed that this is very difficult for farmers to do, pointing to the take-up of the BEAM scheme as proof:

“The evidence of the BEAM scheme is that lots of farmers, despite their low levels of profitability, were not willing to take what some people thought was free money on the table – because that came with a requirement that they reduce their levels of stock.”

“There seems to be some aversion to taking that money, as evidenced by the low take-up.

“Direct payments might be the solution, through the medium of whether or not farmers really want to take them if the requirement is that they stop doing what they have been doing for a long time,” Hanrahan concluded.

Forestry

Prof. Gerry Boyle, director of Teagasc, highlighted forestry, pointing to its Annual Equivalised Value, which ranges from €405 to €482/ha/year based on a Teagasc study on the impact of forestry on farm incomes relative to other types of farming.

“Nearly €500/ha – it actually seems on the face of it a very attractive alternative for some people,” he said.

Tom Houlihan expanded on this, explaining why this wasn’t more popular among farmers:

“It’s a complex decision process and it involves behavioural attitudes and drivers as well as the economic and the physical. It’s a big decision process as well.

What we would say is that maybe it’s not competing; you wouldn’t want to see it competing with the drystock sector – but maybe as a part of a solution on maybe more marginal areas of land it could be looked at in certain contexts.

Prof. Boyle added: “It always is a striking comparison given the levels of net margin we see in drystock.”

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