Beef: huge
challenges ahead
2020 was a very tough year for farmers finishing cattle. COVID-19 issues in spring led to cattle dropping to €3.50/kg at one stage. They then averaged at €3.65/kg for the year, similar to the 2019 price and a long way off where they need to be to be profitable.
It was a better year for weanling and store producers. With weanlings up €30 to €40/head, it sparked a renewed confidence in the suckler sector, with breeding sales ending 2020 on a high. The exodus out of suckling when BDGP finished has not taken place and with BDGP confirmed for 2021, it should help stabilise numbers.
The Irish Government has finally realised the importance of the suckler cow to rural Ireland with schemes such as BEAM, BEEP-S and BDGP, which are vital income supports to a low-income sector. BEAM is likely to present a challenge for many in the first six months of 2021 as they grapple with reducing stock numbers, one of the requirements of the scheme.
Live exports being down 35,000 (see page 5 ) head will be a concern to many and all eyes will now turn to spring 2021 and getting dairy calves exported out of the country. Lower calf exports have the potential to put huge pressure on the suckler sector in the years ahead.
Northern Ireland was the standout performer in term of live exports, with numbers doubling in 2020 on foot of strong retail demand in the UK for retail-spec NI beef and Irish beef then filling the void on the NI market.
Brexit will determine the future of the Irish beef sector and although a deal has been struck, it will still present huge challenges for our industry.
In terms of diversifying our markets and reducing our reliance on the UK, progress will have to be made on Chinese market access and political intervention may be required to secure access again. CAP reform, COVID-19 and Brexit are likely to dominate the headlines in the beef sector for much of 2021.
Tillage: hoping for better things in 2021
The prospects for 2021 have started on a better note. Teagasc put winter crop planting well up, with almost 20% higher winter barley and oat plantings and winter wheat is up over 50% compared with 2019.
Indeed, these increased plantings may be even slightly higher due to the level of carryover seed from 2019.
The winter oilseed rape area is back 7% to 8,000ha due to the late harvest and the poor planting conditions during that sowing window.
Higher winter plantings should mean higher harvest output, especially if crops remain full going into spring. While we do not know what kind of growing season we will get for 2021, having full winter crops would be a good start.
Markets leave some scope for optimism compared with this time in other years. While prices are uncertain, early forward price offers have been relatively good and, despite some slippage at times, remain satisfactory for the time of year.
While forward prices of €180/t for barley and around €190/t for wheat are not fantastic, they would look good in a mix of selling prices in many recent years. Europe will likely have more grain next year and the internal market could revert to being a pressured market.
Oilseed rape prices have been relatively strong in recent years and this seems likely to continue due to production constraints in the EU following the loss of neonicotinoid insecticides. MATIF futures for next November had been up around €395/t but this has dropped by €5 to €7/t in recent weeks as the Australian harvest comes on stream.
Renewable energy: a busy year ahead
2021 is set to be busy one in the renewables sector. Many of the onshore wind and solar farms, which secured funding under the first Renewable Electricity Support Scheme (RESS) auction, will be constructed over the coming year.
Preparations for the second auction (RESS-2) and the first offshore auction are under way. They are due to take place in 2021. Projects which will be eligible for these auctions are in development and, in many cases, farmers and landowners are leasing their land to the project developers.
We will also see more community energy groups develop and take stakes in projects after the success of the first auction.
Rooftop solar
The development of rooftop solar will continue at a rapid pace with the help of a 30% SEAI grant, which is due to close in January.
This is ahead of an anticipated move by the Government to allow surplus renewable electricity to be sold to the grid.
This may result in the formation of farmer-led renewable co-operatives selling electricity to the grid. This kind of structure is complex, but is in development.
Heat
The Support Scheme for Renewable ?Heat (SSRH) remains open for application.
The scheme faced many challenges in its first year of operation but there have been a number of successful applicants.
Work will continue to develop a large-scale biomethane industry, which is critical to help decarbonise the country’s heat usage.
Finally, we will continue to see innovative new renewable projects funded through schemes such as the EU Innovation Fund and Climate Action Fund.
Sheep: Positive prospects for 2021
Leaving Brexit aside for the moment, there is a relatively positive outlook for the Irish sheep sector in 2021.
The year will be starting from a solid platform, with prices running 50c/kg to 60c/kg above the corresponding period in 2019, which should be noted was a challenging year. Year-to-date prices for 2020 are running 50c/kg ahead of 2019 levels and 30c/kg above the five-year average.
Market demand for sheepmeat has in some cases improved due to COVID-19, with consumers having more time to prepare meals. This is particularly true in many key EU markets and this lift in consumption should hopefully follow through into 2021. Lamb supplies are also relatively tight, with total sheep throughput running 60,000 head higher.
Demand in key EU markets is also likely to be boosted by a continued reduction of New Zealand sheepmeat imports into the EU as they prioritise China. The latest data for January through to October shows imports of 54,016t running 11% lower.
Sheepmeat supplies within the EU would have been a lot tighter if there had been a no-deal Brexit. The UK exported 62,833t of sheepmeat (-11% on 2019 levels) on to EU markets for the first 10 months of the year.
A no-deal Brexit would have created more demand for Irish lamb from EU markets as British would have been squeezed out by tariffs but it would also have caused huge disruption.
The UK is currently Ireland’s second-largest export market, accounting for in the region of 12,000t to 14,000t annually. This will now require veterinary certificates and customs declarations but the deal means there will be no tariffs on Irish exports to the UK.
There could also be delays in using the UK land bridge for exports to the continent as new regulations bed in.
Northern Ireland sheep farmers face difficulties bringing breeding stock in from Scotland because of the six-month standstill requirement. However, they will be able to continue sending lambs south for processing and onward sale in EU markets, as they have been doing up until now.
Dairy: positive
outlook for milk
but nitrates in focus
Farmgate milk prices held up quite well in 2020 despite the huge market challenges as a result of the COVID-19 pandemic. The national average milk price was down a touch to finish at 33.80c/l, but that is quite a good average when you compare it against the 27.03c/l in 2016.
The outlook for 2021 very much depends on how Brexit settles in as some processors are more exposed than others, particularly on the cheddar cheese front to the UK.
There is no doubt 2020 markets have finished strong and maybe this hasn’t materialised into increased milk prices as much as farmers would have liked. A strong global dairy commodity price range, allied with a strong Chinese demand for New Zealand powders, is definitely underpinning the world market.
It means there are no large dairy product stockpiles in place as we head into 2021 and, unless something unforeseen happens, the outlook would look good for February and March when Irish milk supply kicks off in earnest.
The dairy processing industry was not affected significantly by COVID-19, thankfully, and all in the industry will be hoping for the same in 2021.
In the fields, a mild November and December have led to good grass growth and most farmers have about 15% more grass now than this time last year. Cow body condition score is generally good so if the weather is any way good next spring, we should expect record-breaking milk supply in the first quarter.
The immediate challenge facing dairy farmers in 2021 will be regulatory with the upcoming review of the nitrates derogation. Increased scrutiny on large farms, higher-stocked farms and on slurry storage capacity is likely.
Beef: huge
challenges ahead
2020 was a very tough year for farmers finishing cattle. COVID-19 issues in spring led to cattle dropping to €3.50/kg at one stage. They then averaged at €3.65/kg for the year, similar to the 2019 price and a long way off where they need to be to be profitable.
It was a better year for weanling and store producers. With weanlings up €30 to €40/head, it sparked a renewed confidence in the suckler sector, with breeding sales ending 2020 on a high. The exodus out of suckling when BDGP finished has not taken place and with BDGP confirmed for 2021, it should help stabilise numbers.
The Irish Government has finally realised the importance of the suckler cow to rural Ireland with schemes such as BEAM, BEEP-S and BDGP, which are vital income supports to a low-income sector. BEAM is likely to present a challenge for many in the first six months of 2021 as they grapple with reducing stock numbers, one of the requirements of the scheme.
Live exports being down 35,000 (see page 5 ) head will be a concern to many and all eyes will now turn to spring 2021 and getting dairy calves exported out of the country. Lower calf exports have the potential to put huge pressure on the suckler sector in the years ahead.
Northern Ireland was the standout performer in term of live exports, with numbers doubling in 2020 on foot of strong retail demand in the UK for retail-spec NI beef and Irish beef then filling the void on the NI market.
Brexit will determine the future of the Irish beef sector and although a deal has been struck, it will still present huge challenges for our industry.
In terms of diversifying our markets and reducing our reliance on the UK, progress will have to be made on Chinese market access and political intervention may be required to secure access again. CAP reform, COVID-19 and Brexit are likely to dominate the headlines in the beef sector for much of 2021.
Tillage: hoping for better things in 2021
The prospects for 2021 have started on a better note. Teagasc put winter crop planting well up, with almost 20% higher winter barley and oat plantings and winter wheat is up over 50% compared with 2019.
Indeed, these increased plantings may be even slightly higher due to the level of carryover seed from 2019.
The winter oilseed rape area is back 7% to 8,000ha due to the late harvest and the poor planting conditions during that sowing window.
Higher winter plantings should mean higher harvest output, especially if crops remain full going into spring. While we do not know what kind of growing season we will get for 2021, having full winter crops would be a good start.
Markets leave some scope for optimism compared with this time in other years. While prices are uncertain, early forward price offers have been relatively good and, despite some slippage at times, remain satisfactory for the time of year.
While forward prices of €180/t for barley and around €190/t for wheat are not fantastic, they would look good in a mix of selling prices in many recent years. Europe will likely have more grain next year and the internal market could revert to being a pressured market.
Oilseed rape prices have been relatively strong in recent years and this seems likely to continue due to production constraints in the EU following the loss of neonicotinoid insecticides. MATIF futures for next November had been up around €395/t but this has dropped by €5 to €7/t in recent weeks as the Australian harvest comes on stream.
Renewable energy: a busy year ahead
2021 is set to be busy one in the renewables sector. Many of the onshore wind and solar farms, which secured funding under the first Renewable Electricity Support Scheme (RESS) auction, will be constructed over the coming year.
Preparations for the second auction (RESS-2) and the first offshore auction are under way. They are due to take place in 2021. Projects which will be eligible for these auctions are in development and, in many cases, farmers and landowners are leasing their land to the project developers.
We will also see more community energy groups develop and take stakes in projects after the success of the first auction.
Rooftop solar
The development of rooftop solar will continue at a rapid pace with the help of a 30% SEAI grant, which is due to close in January.
This is ahead of an anticipated move by the Government to allow surplus renewable electricity to be sold to the grid.
This may result in the formation of farmer-led renewable co-operatives selling electricity to the grid. This kind of structure is complex, but is in development.
Heat
The Support Scheme for Renewable ?Heat (SSRH) remains open for application.
The scheme faced many challenges in its first year of operation but there have been a number of successful applicants.
Work will continue to develop a large-scale biomethane industry, which is critical to help decarbonise the country’s heat usage.
Finally, we will continue to see innovative new renewable projects funded through schemes such as the EU Innovation Fund and Climate Action Fund.
Sheep: Positive prospects for 2021
Leaving Brexit aside for the moment, there is a relatively positive outlook for the Irish sheep sector in 2021.
The year will be starting from a solid platform, with prices running 50c/kg to 60c/kg above the corresponding period in 2019, which should be noted was a challenging year. Year-to-date prices for 2020 are running 50c/kg ahead of 2019 levels and 30c/kg above the five-year average.
Market demand for sheepmeat has in some cases improved due to COVID-19, with consumers having more time to prepare meals. This is particularly true in many key EU markets and this lift in consumption should hopefully follow through into 2021. Lamb supplies are also relatively tight, with total sheep throughput running 60,000 head higher.
Demand in key EU markets is also likely to be boosted by a continued reduction of New Zealand sheepmeat imports into the EU as they prioritise China. The latest data for January through to October shows imports of 54,016t running 11% lower.
Sheepmeat supplies within the EU would have been a lot tighter if there had been a no-deal Brexit. The UK exported 62,833t of sheepmeat (-11% on 2019 levels) on to EU markets for the first 10 months of the year.
A no-deal Brexit would have created more demand for Irish lamb from EU markets as British would have been squeezed out by tariffs but it would also have caused huge disruption.
The UK is currently Ireland’s second-largest export market, accounting for in the region of 12,000t to 14,000t annually. This will now require veterinary certificates and customs declarations but the deal means there will be no tariffs on Irish exports to the UK.
There could also be delays in using the UK land bridge for exports to the continent as new regulations bed in.
Northern Ireland sheep farmers face difficulties bringing breeding stock in from Scotland because of the six-month standstill requirement. However, they will be able to continue sending lambs south for processing and onward sale in EU markets, as they have been doing up until now.
Dairy: positive
outlook for milk
but nitrates in focus
Farmgate milk prices held up quite well in 2020 despite the huge market challenges as a result of the COVID-19 pandemic. The national average milk price was down a touch to finish at 33.80c/l, but that is quite a good average when you compare it against the 27.03c/l in 2016.
The outlook for 2021 very much depends on how Brexit settles in as some processors are more exposed than others, particularly on the cheddar cheese front to the UK.
There is no doubt 2020 markets have finished strong and maybe this hasn’t materialised into increased milk prices as much as farmers would have liked. A strong global dairy commodity price range, allied with a strong Chinese demand for New Zealand powders, is definitely underpinning the world market.
It means there are no large dairy product stockpiles in place as we head into 2021 and, unless something unforeseen happens, the outlook would look good for February and March when Irish milk supply kicks off in earnest.
The dairy processing industry was not affected significantly by COVID-19, thankfully, and all in the industry will be hoping for the same in 2021.
In the fields, a mild November and December have led to good grass growth and most farmers have about 15% more grass now than this time last year. Cow body condition score is generally good so if the weather is any way good next spring, we should expect record-breaking milk supply in the first quarter.
The immediate challenge facing dairy farmers in 2021 will be regulatory with the upcoming review of the nitrates derogation. Increased scrutiny on large farms, higher-stocked farms and on slurry storage capacity is likely.
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