Rocky 2014 Forecast to Give Way to Strong 2015
2014 has been a “rocky old year” for the beef industry but better prices are on the cards for 2015 due to an expected shortage in cattle numbers.
The National Beef Association (NBA) forecasts a strong 12 months ahead, following the rollercoaster ups and downs that have marked 2014. The good weather and excellent grass helped to counterbalance the steep fall in prices at the start of this year, and the NBA has also made major strides forward in its infrastructure to support the industry.
Chris Mallon the NBA’s National Director said: “Beef price is always dictated by the supply: demand ratio in the UK, Europe and the world. After a pretty poor start in the beef price world, it turned out to be a very good farming year. Finishers in particular had severe cash flow difficulties in the first half of the year but this has turned itself around.
“Weather-wise, after a very slow start, we had one of the best summers and autumns. The grass has been phenomenal and the stock has performed very well. People have been bringing calves in to wean and they are 60 kilos heavier than at the same time last year.
“Store cattle this autumn have not hit the heights per kilo wise, but the price per head has been a record for this time of year.”
One of the key issues at the start of the year was the 70p per kilo falls in the beef price. Looking back at the issues Tesco has faced in 2014, it seems the supermarket’s attempt to cut costs was a major contributory factor in the price reduction. Such fluctuations make it difficult to run a livestock business and plan for the future.
Increasing numbers of Irish cattle coming on to the market combined with the strength of the pound affected export prices. However, after eight months of losses, farmers began to see slow gains which have picked up speed as we head towards the end of the year. The limited number of finished cattle coming forward has been a factor, and suckler cow numbers are also continuing to fall, although farmers are still not receiving the percentage they require from the supermarkets.
In the autumn, the NBA launched a dedicated Health Committee to focus on issues in the national herd. Bringing together vets, farmers and breed societies from around the UK, the body was set up to provide information in plain English about common health issues and the financial implications they can have for farmers.
Chris said: “The launch of the Health Committee comes at an opportune time, especially as TB is such a huge issue right across the country, whether in high risk or low risk areas. The committee is aiming to help farmers improve the health of their animals, and therefore the profitability of their businesses, and will be hitting the road in 2015 to meet members.”
Although it is difficult to predict precisely what is going to happen to the beef market in the short term, the outlook for the industry in 2015 is forecast to be more settled than the previous 12 months. In the UK in 2013 and early parts of 2014 we saw increased numbers of dairy-bred bull calves being shot at birth so this should have a positive effect on beef prices in 2015.
The fall in cereal prices in the latter half of 2014 however is likely to see more black and white bulls being reared to come on the market towards the end of 2015 and into 2016. The fall in cereal prices is also likely to results in an overall increase in carcase weights by about 5-8kg.
Fewer Irish cattle coming forward is expected to reduce numbers, and volatility. A strong export market is key to supporting British prices and the NBA would like to see export trade continuing to grow, especially to Hong Kong which is the 'grey channel' into China. A significant proportion of this is fifth quarter beef.
Chris said: “The future is looking more positive even if the UK is not approved to export beef to America, because the Irish will.
“The Irish identified new markets outside the UK for finished stock and their yearling cattle. Here in the UK, cattle numbers are even tighter, not only those to import from Ireland, but also domestically. The cattle being sold are younger, so they will not be there later in the year.
“UK domestic producers are in a much more optimistic place than we were at the same time last year.
“UK beef has a high welfare provenance and production integrity compared to imports, and as producers we are reliant on consumers demanding British beef. Supermarkets that sell fresh British beef i.e. M&S, Waitrose, Morrisons, Lidl, Aldi, Co-op must be congratulated, however we would like to see more commitment and support from the other major supermarkets to display and sell more beef with the British banner clearly labelled. This will allow buyers to make a much more informed choice.”
Educating and informing consumers will play an important part in the future of the industry. A trend for consumers to move away from supermarkets back to butchers should be encouraged as part of efforts to persuade more people to buy and eat British beef.
Chris said: “In order to boost sales, we need to have sensible prices that are affordable for consumers. It’s important that as farmers we are realistic.”
In the longer-term, the continued growth of the world population and improving economies, especially the BRIC countries, particularly China, should see increased demand for beef so long term prospects are relatively positive. So, efforts need to be made to encourage more people into livestock farming and backing for the younger generation will form a key part of the NBA’s aims for the years ahead.
More immediately, the industry is collectively crossing its fingers for a good winter and another year of mild weather, which will result in a good grass season and prevent feed and cereal prices from rising rapidly.
Chris said: “The signs are there that 2015 is set to be a strong year for beef farmers, and the NBA will be there to support them throughout the year ahead, with advice, guidance and information to help them make the most of their markets.”