COULD SUCKLER BEEF FARMING EVER BE A GRAVY TRAIN?

This post first appeared online at http://www.thatsfarming.com in January 2018

Is there is an unwritten policy to replace sucklers with dairy cows? Beyond ‘policy’ there seems no limit to how often the press will tell us that dairy farming is a gravy train that makes a good deal more money than sucklers. Also, is it driven by the belief that profit per GHG unit from a dairy cow is greater than that from a suckler? But are we really being fair to the suckler cow and her keeper?

Most will be aware that I have a simple position when it comes to farming on a small-scale; it must be about value rather than quantity. If your production base is small, do not try to produce commodities. There are exceptions and one I know well is the Thai rubber industry, by far the World’s largest supplier of natural rubber but an industry dominated by hundreds of thousands of smallholder-producers. It is possible to be small and supply commodities, but it yields only a few dollars a day.

So, I do not get over-excited about the international competitiveness of the Irish dairy sector. Its scale is against it when it comes to commodity production. 2017 was a better year for milk prices, but it is a short memory that forgets about the poor prices of the two proceeding years. And we are told 2018 is not going to be great either. If one ignores the costs of family labour, land and debt, Irish milk is low cost, but nobody can survive being paid below the full cost of production for long. Ultimately, the Irish dairy sector is hamstrung by its seasonality and product mix; it cannot add the value its small-scale farmers need. And it has not invested to focus on high-value.

Meanwhile, we are being regaled with stories about the demise of the suckler beef sector. Get out and start milking. Land and location suitability anyone? Capital availability? Labour requirements? True, the dairy industry has invested a billion Euro or so in processing capacity, but is this massive investment now delivering World-leading farm-gate price? Or an EU leading price? But still, if you highlight farm incomes based upon partial costings and do not dwell too long on loan repayments, yes it can look an awful lot like gravy but it is not.

But back to sucklers. One should always ask why are farmers keeping suckler cows. The reason is that they often fit in well with the land, the farmer’s time and/or the capital available. All are valid reasons for keeping suckler cows and, frustrating as it may be for advisers and discussion-group facilitators, they may be more important factors than profit, production levels or minimising GHG emissions per unit of beef produced. The likelihood is that suckler beef farmers will be around for a while yet, there will be a lot of them and they will be operating at the scale that suits them.

The question is, accepting this, how do we improve the returns to farmers who are not willing to jump on the dairy gravy train or scale-up their beef enterprise, should the land be available? It must be about creating value. It is fine asking for more headage payments, but we need a far more holistic solution that encompasses market-delivered returns and payments for, for example, environmental and landscape ‘public goods’. We also need to know about suckler beefs NET GHG emissions.

Instead of encouraging emigration from the suckler beef sector, maybe we should be asking ourselves what the suckler beef sector could be like if one billon Euro had been invested in its processing sector by entities that were within the control of the farmer? Or realistically, one hundred, or maybe ten million? After all the last is only 1% of that invested in milk processing over the last three or four years. Would we now be talking about the demise of suckler beef farming? When we compare sucklers with dairy cows, we are not comparing like with like, one of them is being treated like Cinderella, the other pampered like one of her step-siblings.

The future of suckler beef is in the premium markets. Elsewhere, others have realized the merits of differentiating beef and suckler-reared offers a means of so doing.  Another is 100% pasture-reared. Specific breeds are coming to the fore. The environmental management of traditional landscapes and/or high-nature-value land can add to the backstory. In addition, some farmers are working out how to balance carbon sequestration [by using specific grazing practices] with GHG emissions with the goal of producing zero emission beef. It is ALL about differentiation.

An absolute fundamental in all of this is having the routes to markets. Premiums must come from the consumer. If the supply-chain operates a high-throughput, low-margin model does it have the excess profits per head to pay a premium price if it does not receive such from the final consumer [via the retailer]? Farmers need to have some control beyond the farm gate. It has gone with the collapse of the small abattoir sector as they had the operational flexibility to provide small-volume service-killing to farmer-producers. It is becoming evident that they must be reinstated or, at least, protected where they remain. With such flexibility will come the capability to develop niche-market, premium-beef products based upon location, landscape, heritage breeds and ecological farming.

This is not about alarming a beef processing industry that has evolved to handle the multitude of heads. It is about giving a few, sucker-beef farmers the option to develop their own products and to market them to premium-paying consumers. One cannot realistically expect those operating a volume-based business model to accommodate a few. Maybe a funding line of €10-20 million would deliver vibrancy to the suckler farming sector? Such an investment in small-scale processing, product development and marketing would give the sector a fighting chance; and certainly, a greater ability to provide a ‘return’ to the taxpayer on a suckler-cow headage payment, should such be granted.

One should add that this is not about volume, that is the 90% plus market segment belonging to generic, quality-assured ‘Irish beef’ whereas a key to success for premium suckler-reared beef will be to limit volume. It will be about creating origin schemes linked to location, landscape, heritage breeds and ecological farming that control supply volume.  One cannot under-estimate the importance of such. Just what breed premium schemes return a significant price bonus to the farmer where they are 50% sire-only? If the suckler cow is at least 50% pure-bred, supply volumes will be limited. It is something the French no well with their 100% Charolais and Limousin schemes.

So maybe before we write off the Irish suckler herd, we should be seeking funds to support the development of premium beef products and their routes to markets. The opportunities are there, not to mention the farming skills and land base. If anything is missing it is the leadership to challenge the status quo and to demand that change happens. As welcome as a new headage payment would be to sucker farmers, if it is to be given, it needs to be provided alongside funds to develop the suckler beef farming as the specialist, niche, flagship sector that it should be.

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