The Government should make €24 million in unspent farm aid available to beef farmers immediately to help them through the current Covid-19 crisis which has seen prices plummet as exports markets are closed, according to the IFA.
IFA national livestock chairman, Brendan Golden said one step that the Dept of Agriculture could take to support the country's beef industry would be to release unspent Beef Exceptional Aid Measure (Beam) funds.
“That Beam funding was set to up to deal with the losses due to Brexit - €50 million came from the EU and €50 million from the government but only €76 million was drawn down so there’s €24 million available to support farmers.”
Mr Golden said that beef prices at the moment are at a ten-year low with a base price of €3.40 a kilo for prime steers and heifers, resulting in the 60,000 or so farmers involved in beef production, turning a loss on their animals.
Beef prices have been dropping at a rate of 10 cents a kilo per week for the past three weeks which, on a kill rate of approximately 30,000 animals a week, means beef farmers have lost out on €3 million plus in the last month or so.
Both Mr Golden and Cormac Healy of Meat Industry Ireland, the section of IBEC which represents 85 per cent of Irish meat processors, are agreed that the cause of the problem lies in the closure of export markets as a result of Covid-19.
According to Mr Healy, Irish meat exports are worth around €4 billion a year with beef accounting for €2.5 billion of this, pork accounting for close to €1 billion and sheep and poultry accounting for around €300 million each.
McDonalds
"Some 90 per cent of our beef is exported and the principal impact of Covid 19 in the meat market across Europe has been the closure of the food service channel - restaurants, catering, quick serve restaurants like McDonalds, " he said.
“A little over 30per cent of our beef exports would be destined for the food service channel but because restaurants are closed all over Europe due to Covid-19 lockdowns, that market is effectively closed to us at the moment.
“And while the food service sector is important in volume terms, it’s actually even more valuable in financial terms as it’s the higher value cuts - your fillet, your sirloin, your rib-eye steaks that are most impacted by that closure.”
Mr Healy said the same is true of the UK which accounts for approximately 50 per cent of Irish beef exports with the food service sector there also closing down due to the Covid-19 pandemic.
And while people are staying at home to eat, resulting in greater demand for mince and diced beef in the retail sector, it isn’t enough to offset the drop in demand for the higher value cuts in the closed food service sector.
According to Mr Healy, the Irish retail market has seen a number of spikes and surges since Covid-19 hit, with many consumers stocking up on mince and diced beef early on in the crisis, but the retail trade has since normalised.
“The spikes and surges have gone out of the retail trade now - I think consumers recognise the supply chain is working and is not going to run out in the short term so retail sales have stabilised but at a higher than normal level.
“But even that higher level, which is a result of people no longer eating out but eating at home and buying more at retail, it’s not anything like the level that would be necessary to offset the loss of the food service channel.”
The net effect is that meat processing plants are killing fewer animals per week with the numbers of animals being slaughtered dropping from a high of 40,881 in the week ending February 24th to just 25,225 animals last week.
The fall has been consistent week on week but it was noticeable that in mid-March, the numbers being killed, which had exceeded the equivalent figures for 2019, began to fall below the 2019 kill figures for the first time.
Prices weakening
According to Mr Healy, the plants are processing fewer animals as they are unable to market all the animals that they have while it has also resulted in prices weakening for farmers supplying the plants.
Meat plants employ approximately 15,000 people and most of them have adapted to the reduced animal throughput by putting staff on shorter hours rather than laying off staff, said Mr Healy.
“There is no doubt that prices have eased back and prices were already a challenge for beef producers in terms of their overall income - it was extremely tight but the latest drop is posing serious problems for producers.”
Mr Golden said the net effect of the drop in prices means that farmers involved in finishing cattle won’t have the money to buy new animals so the drop in price will filter all the way back the line to suckler farmers.
However the IFA had looked at figures and hoped that a rise in kills in mid-March just before the Covid-19 lockdown was a result of farmers trying to get rid of animals early which may reduce pressure in the months ahead.
“With 25,000 cattle being killed last week, we are long way under where we were at this time last year but we think from the figures for May that there may be less animals coming through so that might ease the pressure a bit.
“We’re hoping that guys decided to move stock early in the middle of March because they were afraid factories were going to close and that they got rid of a lot of animals and were able to put the others to grass.”
“That might delay the supply of animals to factories into the summer but at least, it means fellows won’t be carrying the same huge costs they would if they had carried them in the shed during the winter before finishing.”
