Teagasc Sets Out Beef Challenges

15 September 2004

A Teagasc expert has forecast that beef farmers who apply the best production technology and produce product for the high-priced consumer markets can look forward to increased incomes after the implementation of the new EU policy in January 2005.

However, Bernard Smyth, Teagasc Chief Drystock Adviser, warned that an increase in beef prices will be a prerequisite to profitable farm production.

He said an increase in producer prices will best be achieved through expanding partnerships between farmers and meat processors. These partnerships would lead to more market-oriented production and improved marketing efficiency.

He said that in the new era where premia are decoupled from production a price rise will be essential for beef produced during the expensive winter period. Also, there will need to be a much higher premium for quality beef produced from suckler herds.

Addressing the National Beef Open Day at the Teagasc Beef Research Centre at Grange, Co. Meath, Bernard Smyth said farmers who cannot generate a worthwhile margin, excluding the new single farm payment, will find the payment being used to cover production costs and will have no future in beef farming.

“While the single farm payment will be a vital component of farm income particularly in the medium term, its value will be eroded over time and beef farming must stand on its own feet if farmers are to make a viable income,” he said.

He said that almost half of beef monitor farms, which are used to promote new technology, achieved margins of over €600 per hectare in 2003. The performance of these farms is likely to increase in 2004 because of higher beef prices.

“Only a minority of these farmers are making a profit level over and above their total receipts from the various EU premia. Increasing the number of farmers making a real profit from beef is the major challenge facing all sectors of the industry,” he added.

He urged all committed farmers to undertake a profit analysis as the first essential step in planning for the new market-driven environment. A specially designed Teagasc Profit Monitor will enable farmers to establish their current profitably, excluding EU premia. This will identify the strengths and weaknesses of the business and will guide decisions on the best way forward.

He also advised farmers to pay particular attention to the price they pay for rented land. Unless margins from beef increase, rental charges will need to drop from their current levels, he said.