What’s in store for the suckler farmers and beef finishers in 2019?
For many suckler and beef farmers, 2018 will be a year to forget. Abnormal weather conditions played havoc on Irish beef farms at different stages of the year.
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 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. But, even though a higher margin is expected, it makes for pretty grim reading.
Speaking on Tuesday, Teagasc’s Jason Loughrey said: “A return to normal weather conditions will mean an improvement in feed bills and profitability.
“Sucklers experienced – on average – a decline in income and we project an improvement in 2019. The improvement in the margins of finishers will influence what happens in the marts and we can expect some increases in cattle prices as a result.”
According to Teagasc’s Annual Review and Outlook 2019, a 10% increase can be expected with calf prices. In addition, R3 steer prices are expected to rise 2% on 2018 levels, while weanling and store prices are projected to increase by 3% and 6% respectively.
While feed prices increased by 5% in 2018, these prices will stabilise in 2019 and remain unchanged, according to Teagasc. But again, assuming normal weather conditions and grass growing conditions, feed usage is expected to decrease.
In addition, direct costs are expected to rise 1% and fuel prices are forecasted to remain on par with 2018 prices. However – according to Teagasc – total input costs will be significantly lower.
Looking at suckler enterprises, gross margins are forecasted to rise 20% on 2018 levels, while those farmers running cattle finishing operations are projected to have gross margins increased by 19%.
The report forecasts price improvements for calves, weanlings, stores and finished cattle and gross margins for suckler farmers are projected to increase by 20% amounting to €458/ha.
However, while gross margins are expected to increase in 2019, a negative average net margin of €27/ha is forecasted.
- Gross margin: +20%;
- Net margin: -€27/ha.
Moving to cattle finishing enterprises, the gross margin is expected to jump by 19%, resulting in a forecasted average positive net margin of €9/ha.
- Gross margin: +19%;
- Net margin: €9/ha.
In addition, Teagasc has estimated that the average suckler farmer – involved in the scheme – will receive a payment of €44/ha from the BDGP in 2019.
Budget 2019 has led to the introduction of a new scheme entitled the Beef Environmental Efficiency Pilot (BEEP) scheme and Teagasc has estimated that the average suckler farmer – involved in the scheme – will earn an additional €17/ha from the BEEP programme in 2019.