Winter finishers are nursing losses of €150-200/hd at current beef prices, but this could balloon to €300/hd if the factories succeed in pulling base quotes further, the ICSA has warned.

Farmers finishing 50 cattle stand to lose close to €10,000 on stores bought at the height of the market last autumn, while those finishing 100 bought-in cattle are facing losses of €15,000 to €20,000, according to the ICSA’s Edmund Graham.

Graham described the losses being incurred by large specialist winter finishers as unprecedented, and cautioned that the situation risked becoming far worse if the factories continue the downward pressure on prices.

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“I sold cattle this week, and I’ve never taken such a beating,” admitted Graham, who has taken over the role of ICSA beef committee spokesperson on a temporary basis.

The factories are currently working off a base of €7.00-7.10/kg for steers and €7.10-7.20/kg for heifers, but Graham claimed the base quotes needed to be in the €7.50-7.70/kg for farmers to break even.

“I’ve been speaking to several winter finishers in recent days who tell me they’ve never lost as much money as they are losing right now,” Graham said.

“Last autumn they were buying store cattle at the going rate when beef was making around €7.80/kg. Today, when they go to sell, they are looking at quotes closer to €7.00/kg,” he explained.

“That kind of swing wipes out any margin. When you add in feed and all the costs associated with carrying cattle through the winter, it becomes a massive financial hit,” Graham said.

The ICSA representative questioned how cattle prices could be falling at a time when global supplies are forecast to contract by around 3% this year, the kill across Europe is down around 4-5% and the factories are closing boning halls because they killed 220,000 less animals last year.

Accusations of talking down the trade

Graham accused the factories of talking down the trade and managing throughput in order to keep a lid on prices.

“Factories are actively looking for cattle and are booking animals weeks in advance. Yet they are refusing to stand over a price, telling farmers they will be given a quote closer to the kill date,” he explained.

“That leaves farmers completely exposed. You are expected to supply cattle without knowing what you will be paid,” Graham said.

“We are talking about farmers who commit significant money to feed cattle through the most expensive period of the year with no guarantee of the price they will receive when they go to sell. How can any business plan around this level of uncertainty?” he asked.