The contribution of the beef industry to economic activity in Ireland, particularly in regions where sectors other than agri food are less active, has been well recognised for some time. However, it is also clear from various data sources that farm incomes are very low for beef farming systems and in particular for suckler beef farms.
The recently released Teagasc National Farm Survey results showed an 11% increase in farm incomes on suckler beef farms. However, this only moved family farm income on suckler farms to €9,188 per farm, with this including direct payments and subsidies of €14,700. In other words, suckler beef farms operated at a loss from their farming activities.
Low family farm income is the single biggest challenge facing the beef industry
The low farm income is reflected in a decrease in suckler cow numbers in Ireland. Since 2010, numbers have declined by 14% and are currently below one million head for the first time since the early 1990s.
Low family farm income is the single biggest challenge facing the beef industry and will require a multi-faceted approach to address. It is clear that farm supports will continue to be an essential component of beef farm incomes. Given the CAP reform proposals that were recently published by the European Commission, it is likely that the current payment model of the Basic Payment Scheme will change in the coming years and that future payments will be increasingly contingent on meeting environmental objectives. Programmes such as the BDGP and BEEP set out to incentivise more efficient suckler cow breeding with the overall objective being to improve environmental efficiency. Schemes such as these and GLAS are likely to become a much greater feature of the farm support infrastructure.
It is important that suckler farmers also focus on the factors inside the farm gate which drive efficient suckler beef production such as breeding, nutrition, animal health and grassland management. Efficient suckler beef production will require farmers to maximise the proportion of life-time daily gain, and suckler cow feed requirements, obtained from a grazed grass diet.
Thus, high levels of reproductive performance resulting in compact spring calving and a long grazing season are paramount. On average age, first calving is six months later than optimal, with consequent economic and environmental costs. Calving interval is more than 30 days longer than the target 365 days, with consequent impacts on calving rate, one of the most important factors affecting profitability on suckler beef farms. Likewise, age at slaughter is six months later on average when compared to high performing herds at the same carcase weight. Again, this is an economic cost and furthermore, given the current policy agenda, the impact on greenhouse gas emissions is significant.
The number of cows carried on a farm will dictate total farm income
Adoption of best practice can deliver a net margin per cow calving of approximately €300 at current prices (€3.75 base R3 price) with a sensitivity of €35 per cow for each 10c/kg change in beef price. The number of cows carried on a farm will dictate total farm income, with this depending on the set of circumstances on that particular farm; for example, land type, prevailing weather (in particular rainfall), housing availability and level of off-farm employment.
Research at Grange is focusing on these key factors underpinning efficient suckler beef production including projects on suckler cow and bull fertility, respiratory illnesses in calves, management of infectious parasites, efficient winter feeding and finishing, and factors affecting meat quality traits.
There is also farm systems research which both incorporates best practice and also investigates farm system comparisons such as divergent genetics and herd-level feed management. A core research objective is to carry out a suite of environmental measurements and assessments ranging from the impact of alternative feed and management practices on methane emissions to whole-farm greenhouse gas and ammonia emission impacts.
Since the abolition of milk quotas, we have a seen a significant rise in the number of dairy cows. Where suckler cows have dropped below the 1m mark, dairy cow numbers have risen from just over 1m to almost 1.5m.
As this expansion slows, there is a lower demand for dairy heifers and an increasing proportion of the national dairy herd is being bred to beef sires. These sires are predominately early maturing breeds – Angus and Hereford.
We now have over 1m calves being bred on dairy farms that are destined for beef production. Of these, 15-20 % have been exported as calves to the continent in recent years but most of them are finished on Irish farms.
Teagasc has been operating a dairy-calf-to-beef research unit in Johnstown Castle since 2010 and in 2018 the dairy-calf-to-beef research demonstration herd was set up in Teagasc Grange. We also have the Teagasc Green Acres calf to beef demonstration farm programme in operation since 2015, which is in its second phase.
These levels of profitability are similar to what can be achieved in well-run suckler to beef systems
Profitability in dairy-calf-to-beef systems has consistently been shown to be dependent on three factors – calf purchase price, input costs and beef sale price. At medium stocking rates (over 1.7 LU per ha) there is the potential to generate a net margin per ha (excluding direct payments) of €100 to €200, whereas at higher stocking rates (over 2.8 LU per ha) the net margin per ha can be in excess of €400.
These levels of profitability are similar to what can be achieved in well-run suckler to beef systems but are of course dependent on a high level of management right through from calf rearing to finish.
The focus in recent years has been on improving the genetics of the beef calves being bred in dairy herds. The new Dairy Beef Index (DBI) is one of the tools that aids the selection of sires that have above-average carcase traits and it is something we are currently assessing in the dairy-calf-to-beef demonstration unit in Teagasc Grange to measure its impact on beef margins per hectare.
The structure of Irish beef farming is one where most farms are not large businesses, whether measured by land area farmed or the volume of output produced.
On most Irish beef farms, incomes earned from farming are supplemented by income from non-farming activities. This reality is unlikely to change in the medium term. Beef competes with other meats and proteins for the consumer’s euro and there is no external driver that is likely to lead to an increase in the real price of beef that would turn a farm that currently struggles to earn a net margin into one that consistently earns a positive net margin.
The policy context within which farmers produce is changing and perhaps changing dramatically
Irish beef farmers, both large and small, single suckling and cattle finishers, will have to look at what they can control inside their farm gate in terms of improving their technical performance as outlined in the many contributions by Teagasc colleagues during this year’s Teagasc Beef Week. These farm management practice changes and new technologies can consistently improve beef margins across all farm scales.
The policy context within which farmers produce is changing and perhaps changing dramatically. Brexit looms, CAP and environmental policy changes are imminent and all pose challenges for the Irish beef sector but could also create opportunities.
The recently published European Commission Farm to Fork strategy reflects changed societal concerns with respect to the impact of agriculture on the environment, animal health and welfare and human health. While the process of CAP reform is still proceeding, and proceeding slowly, the implementation of the new CAP in Ireland will reflect the changed priorities evident in the Farm to Fork strategy. Support of farm incomes through direct payments will continue, but policymakers will, reflecting changed citizen priorities, demand more in terms of environmental delivery in return for this income support.
This is an important opportunity
The CAP as implemented in Ireland will have to address the nine objectives set out in the Commission’s CAP proposals, but we will have more freedom to prioritise how we spend our share of the CAP budget. This is an important opportunity and should prompt the question about what the Irish agricultural industry and wider Irish society wants agricultural policy to achieve. We should have the ambition to implement a CAP in Ireland that reflects our current national and industry priorities rather than the priorities on almost 20 years ago.
Irish beef farmers produce a product that by almost all metrics is healthy and environmentally sustainable. Based on Ireland’s extensive low-input grass-based systems, on a per unit product basis the carbon footprint of Irish beef is one of the lowest in the EU. As European consumers’ consumption of beef recovers post-COVID Ireland, the Irish industry needs to ensure that the beef product it offers to consumers in the EU and the UK is one that not only ticks the box in terms of being price competitive versus other proteins but, insofar as possible, also earns a premium based on the verifiable environmental, animal health and human health attributes of our beef production systems.