ICSA says beef price drops raise serious questions on beef future

31st July, 2012

Irish Cattle and Sheep Farmers’ Association beef chairman Edmond Phelan is extremely critical of the sudden beef price drops in July, which call into question the wisdom of Food Harvest 2020 expansion targets.  “We have seen yet again that there is no real commitment by beef processors to a long-term sustainable margin for beef farmers.  Instead of partnership, trust is again breaking down.   Factories seem to look for every chance to capitalise on any weakness among sellers.”  
 
“The biggest weakness is when supplies increase relative to demand.  For that reason, I would have to reiterate that plans to expand beef output by 40% are pie in the sky unless we can see real evidence first that markets have expanded.  Instead we are now faced with the question- is a weekly kill of 23,000 or 24,000 too much?”
 
“The meat factories need to provide answers.  It is clear that price cuts in July were not due to oversupply.  It is likely that they were just taking advantage of farmers who were in a weak position.  Soft selling is always something that we try to encourage farmers away from but it’s not always easy when the weather is so atrocious.”
 
Mr Phelan also suggested that some soft selling is arising due to cash flow difficulties.  “I am very concerned that banks are not walking the walk in terms of supporting farmers, particularly with overdrafts and other temporary loans.  There are disturbing reports of overdraft facilities being squeezed.  Banks have no justification for this, as the farming loan book is one of the best assets in banks. A farmer who has cattle to sell should not have to sell under pressure if it is more advantageous to wait or to feed for a few weeks.  Banks need to understand this and to support it,” said Mr Phelan.  
 
“Unless there is a commitment from processors and banks to the sustainability of beef farming, then there will be a real question mark over the future of beef and particularly over the Food Harvest 2020 expansion plans,” he concluded.