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Price contracts should be introduced in the beef sector to help finishers avoid heavy financial losses, senior agricultural manager at Ulster Bank Cormac McKervey has said.
Speaking at an event in Ulster Bank headquarters in Belfast on Wednesday, McKervey maintained that most winter finishers bought cattle last year in the expectation that beef prices would be £3.55-£3.60/kg this spring.
“Winter finishers have taken a bad hiding over this past winter. They are either breakeven at best or losing money,” he said.
Pointing to fixed-milk-price contracts which have been introduced in the NI dairy sector and a dairy beef scheme which was launched by Kepak and Glanbia in the Republic of Ireland last week, McKervey said that similar initiatives were needed in the NI beef sector.
“Finishers would at least have some guarantee of a margin if they know their cost of production,” he said.
McKervey added that potential reductions in farm support payments after Brexit could put further pressure on beef finishers as there would be less money available within businesses to cover losses: “The sector is going to struggle unless there is something concrete put in place.”
Market
While it has been a difficult start to 2019 for finishers, there are signs of the market slowly starting to turn in their favour. Base quotes for U-3 grades are up 2p/kg this week at some NI factories to 332p/kg, although more is available to regular suppliers, with deals for heifers into the low 340’s.
The trade for forward cattle in the marts is also stronger, particularly for suckler bred types.
Reports suggest U grading heifers are currently making 200p to 215p/kg, making a 600kg animal worth £1,200 to £1,290. At a 57% kill-out, this converts to a beef price of 350p to 377p/kg.
Supplies
However, factory buyers maintain that supplies still look strong for the rest of the month, although in Britain, tighter numbers are starting to bite, and in Scotland at least one factory has added 15p/kg to base quotes over the last week, taking the quote for a R4L to 355p/kg.
The same trend for tighter numbers is expected in NI over the coming months, with the latest forecasts from the Livestock and Meat Commission (LMC) showing less prime cattle coming forward for the rest of the year. In quarter 1 (to the end of March) prime cattle numbers were up 2.6% on 2018. However, in quarter 2, prime numbers are estimated down 1.7%, in quarter 3 it is a 4.4% reduction, and quarter 4 a 5.3% reduction. With the overall cow kill also estimated to be down in 2019, it would leave the total cattle kill for 2019 at 437,743, a reduction of 13,616 on 2018.
Looking more closely at the figures, with suckler numbers at a 30-year low, it means more cattle are originating from the dairy herd. LMC analysis shows that suckler bred steers average 376kg at slaughter, compared to 347kg for a beef x dairy steer. So as well as less cattle, lower slaughter weights will also mean factories have less beef to process and sell.
Angus
The other notable trend is the surge in Angus numbers coming forward, especially from the dairy herd. In 2016, a total of 15% of prime cattle killed in NI were Angus sired. To date in 2019, that figure has increased to 20%. Of the beef sired calves registered in NI so far in 2019, Angus accounts for 28%, with Limousin at 22.5% and Charolais at 17.6%.
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