The fact that there are 58,000 cattle in the system at the first of May in the “near ready for the factory” category of between 24 and 36 months suggests that the glut of cattle in the second half of this year won’t be as bad as feared. This is, however, just one part of the story and there are other factors that mean overall there will be an extra 50,000 to 80,000 cattle slaughtered in 2016, according to usually reliable Bord Bia estimates.

With the overall kill up to week ending 11 June running just 15,000 ahead of the same period last year, we can conclude that between 35,000 and 65,000 extra cattle are still in the system compared with last year.

With the numbers in the 24- to 36-month age category down by 58,000, how come there are so many extra cattle in the system with the factory the likely destination? The answer lies in exports of live cattle or absence of in 2015, continued into 2016 and changes to the makeup of the national cattle profile.

Live exports falling

In 2015, over 60,000 fewer cattle were exported live, a fall of 25% on the year before. Almost half of this was caused by loss of weanling sales to the continent and store cattle sales to Northern Ireland which also bought less finished cattle, down a fifth on the year before. Calf sales also fell substantially with the loss of the Belgian market because of disease control rules prohibiting the import of Irish calves.

This year

So far this year, the fall in live exports has continued at the same rate, 25%, or in cattle number terms just over 12,000 head. Some markets have fallen more than others, in particular Northern Ireland and Britain, which are down 12,000 and 3,000 respectively. This is due to a combination of factors including the closing of the price gap between Irish prices and theirs, the fall in the value of sterling since the start of the year and the ongoing labelling issue. Other notable fallers in 2016 so far are the Netherlands, which is predominantly a calf export destination, down 15,000 head, and France, down 2,500 head.

There have been gains and successes elsewhere. Sales to Spain are up almost 4,000 head this year so far, as is Italy, up 2,000. The clearance for sales to Turkey to commence should give the live exports sector a boost, though transport arrangements remain to be finalised.

Further factors

There are further factors that need to be contemplated when assessing the likely impact of 58,000 fewer cattle in the 24- to 36-month age category. The young bull kill so far in 2016 is running 25,000 ahead of last year, or around 1,000 per week. While we might expect a falloff in young bull numbers in the summer months, the reality is that these go into the slaughter system under the 24-month age category. While the 24- to 36-month pool of cattle is down 58,000, the 12 to 24-month pool is up 162,000.

A further feature of the beef cattle herd at present is that as well as the extra 133,000 calves born in 2015 on the back of dairy industry expansion, the number of calves that were sired by either Angus or Hereford bulls was up by 85,247 head. We can expect many of these born in the first quarter of 2015 to be coming ready for slaughter later this year. These breeds mature early, with most heifers and many of the steers ready for the factory well before they reach the 24-month age category. This will mean less of an autumn peak, as they will come through earlier.

Conclusion

The fact that there are 58,000 less cattle on farm on 1 May in the 24- to 36-month bracket tells us that there will be less traditional steer and heifer beef in the system in the months ahead. However, there are other equally important factors to keep in mind when assessing the pool of cattle available to factories. The weak state of live exports, particularly to NI for big forward cattle, is of particular concern, as is the variable weanling trade.

Also the move to kill cattle earlier with more Angus and Hereford cattle in the system means we have to take equal account of the numbers on farm in the 12- to 24-month age category, which showed an increase of 162,000 at 1 May 2015.

Dairy prices

With dairy prices on the floor, we expect that cows will be culled ruthlessly in the autumn and we believe that Bord Bia’s forecast for an extra 50,000 to 80,000 cattle going into factories in 2016 is unlikely to be far off.

A bigger big beef kill in the factories needn’t be a bad thing. In fact, it can be a positive. The additional cost of processing an extra few thousand cattle is small as the greater the throughput the lower the factory overheads and lower unit production cost. The problem lies in finding markets for the additional stock and the volatility of farmgate prices when a few extra numbers are slaughtered rightly scares farmers. However, the factories’ trade association, MII, launched an ambitious plan this week to grow lamb numbers by a million annually.

Ambition

If they can show the same ambition in developing beef markets, assisted by Government in securing access, particularly in the cases of China and the US, then more cattle can be a positive, not a negative that collapses the market. A further strength of the Irish beef herd is the growing availability of Angus and Hereford. Most factories will say there is growing demand from their customers and several stall holders in the Rungis market in Paris this week confirmed an interest in Angus and Hereford for their top restaurant customers.