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Speech by Professor Gerry Boyle, Director, at the Teagasc National Beef Conferen

Good Morning ladies and gentlemen, You are all very welcome to this Teagasc conference, and I would like to thank the Minister, Shane McEntee for being with us here this morning and sharing his vision of where the industry is going. I must have a word with which ever one of my colleagues that gave me the onerous task of speaking on “the future outlook for Irish beef production”. I am not sure anyone has an accurate crystal ball when it comes to predicting cattle prices and what the trends in t

Good Morning ladies and gentlemen,

You are all very welcome to this Teagasc conference, and I would like to thank the Minister, Shane McEntee for being with us here this morning and sharing his vision of where the industry is going.

I must have a word with which ever one of my colleagues that gave me the onerous task of speaking on “the future outlook for Irish beef production”. I am not sure anyone has an accurate crystal ball when it comes to predicting cattle prices and what the trends in the market are going to be. But there are some things we know.

Cattle prices

The market environment in the medium term looks positive – output prices will probably stay at, or even above current levels. Prices for all classes of beef animals - steers, bulls, heifers, cull cows – all rose above previous year’s levels around the middle of last year (2010) and have stayed ahead of year earlier levels since then. Some of this additional market return is being eroded by higher input prices, particularly feed, fertilizer and fuel. Our grass based production systems are more competitive that grain based systems and provide some comparative advantage. Nevertheless margins are likely to stay static.

Profit

Static margins and low levels of profitability are a large part of the difficulty facing the Irish beef sector. The National Farm Survey shows that cattle farmers depend heavily on Direct subsidies, both the SFP and the REPs for their income. In fact on most cattle farms, the Direct payments are subsidising production, and account for over 100% of family farm income. I know we will be having a discussion on CAP reform later this morning and the possible changes that might be coming down the line. And I look forward to participating in those discussions.

But as individual farmers, I would urge you to focus on the factors inside your farm gate and under your direct control, which can be changed and will influence profitability and income on your farm. Improving the technical performance of your beef business is achievable and can be implemented by you. It’s not open to the vagaries of 27 member states deciding on a change of policy. But many cattle farms are slow to embrace some of the proven practices that can increase profits.

Teagasc are fully committed to improving technical performance on Irish farms and are committing considerable financial and human resources to support the sector on an ongoing basis. We have a dedicated team of drystock business and technology advisers in the Advisory Regions around the country, supported by a team of beef and nutritional specialists, working directly with you and with discussion groups to improve grass production, grass utilisation, improve animal breeding through the use of better genetics and measure the financial performance through the e-profit monitors.

Beef research is an integral component of our animal production and grassland research programme, and delivers not just the scientific outputs from the centre in Grange, but from the other animal and grassland research taking place at other Teagasc locations and in collaboration with other research institutions. Later this morning we will get updates on both the Derrypatrick herd in Grange and from the Better Beef Farm Programme, where performance on real commercial farms has been improved. In Johnstown castle Teagasc are exploring calf to beef production systems to determine the most economically viable. In all these initiatives Teagasc are working directly with industry stakeholders, so the work being done is directly relevant to beef farmers and the beef industry.   

Those of you who are earning positive, or close to positive net margins from your cattle business will be interested in this research and the advice available on how to increase productivity and increase output. The farmer, Paul Kehoe, who you will hear from later this morning, is a great example of someone who has expanded and built a good beef business and we in Teagasc have worked closely with Paul on this.

Targets

An ambitious target of a 20% increased in the value of output from the national beef herd has been set in the Food Harvest 2020 report. This is achievable, but I expect it will need to be driven by adding value to existing output, rather than expecting a large increase in production. The calf supply from an expanding dairy herd will deliver some growth, but unfortunately the trend in suckler beef cow numbers has been in the opposite direction since 2005.

If the current improvement in prices, which I spoke about earlier, is maintained through to 2020 then much of the Food Harvest target will be met exogenously so long as the endogenous beef supply is maintained/increased. However policy changes could alter price levels in such a way as to make the achievement of the targets very difficult.

The Irish beef industry is a valuable Industry. The National herd, and in particular the suckler cow herd, is an important national asset for the country. An asset that hasn’t been forced to take a severe “hair cut” or one that has been taken into Nama. It’s a tangible, visible stock owned by the 100,000 cattle farmers in the country, and the loans that are used to finance it are generally secured by land assets and to the best of my knowledge are largely categorised as performing loans by the banks.

So the Irish beef industry is a solid, sustainable business, albeit a low margin business, accounting for 38% of agricultural output and earning valuable foreign earnings through its export earnings.  This important contribution to net foreign earnings is likely to continue to 2020 , despite a slight contraction in the number of cattle herds in the country and a continuation in the trend of a reducing suckler beef cow herd.