Beef production is still inherently unprofitable
EVEN the most cursory perusal of the latest benchmarking figures will confirm that every beef producer remains reliant on the Single Farm Payment, in order to make a living.
This salient fact must be addressed by Farm Minister Michelle O’Neill and the farming organisations as they strive to settle on the best CAP reform deal for Northern Ireland.
It goes without saying that livestock producers deserve a much better return on their investment. But farmers should not be lulled into a false sense of security regarding future prospects on the back of predictions which point to a further erosion in the EU’s potential to produce beef over the coming years. In reality, imports – cheap or expensive – will make up for the shortfall.
Traditionally, finishers have responded to better cattle returns by paying more for stores, which only served to put more pressure on their margins further down the line.
Some of this activity could be excused by the fact that farmers needed cattle to claim subsidy. However, those days are gone forever, with the result that beef producers have no option now but to concentrate on those costs they have control over and not the vagaries of the marketplace.
Economists continue to point out that in a decoupled scenario the lower performing farms must increase their production efficiency if they are to remain in beef. A price rise alone will not be enough to deliver a reasonable income in the current and future climates
However, the worrying fact remains that a significant number of livestock farmers in Northern Ireland do not have a detailed handle on their operating cost base.
It’s extremely difficult to implement any on-farm improvement programme when the producers concerned have no idea as to what their actual starting point is.
The most obvious way round this problem comes in the shape of the CAFRE benchmarking programme. It costs nothing to get on board, yet the scheme offers a host of opportunities for farmers to gauge the efficiencies they are achieving and, thereafter, identify possible ways forward.
Beef production has become an extremely serious business. Only those producers who endeavour to improve their levels of efficiency will survive. Investing Single Farm Payment monies into a beef enterprise is not the way forward. Rather it’s a case of ensuring that businesses can stand on their own two feet by generating profits purely on the back of what the market can offer. And simply worrying about the price of store cattle just won’t cut it in this context.
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