The downward pressure on prime cattle prices has far-reaching implications for the whole beef sector.
There may be a number of factors contributing to the current beef price, but one thing is clear, with no obvious signs of improvement and agriculture facing uncertain times, many beef producers and finishers are having to consider what direction their business is going to take in the future.
The all-prime deadweight average for the week ending September 28 was 322.9p/kg, which was 47p/kg less than the same week last year and it has been a similar story for most of the year.
In spite of this, store cattle prices, although back on the year in some cases, have held up relatively well through summer, helped no doubt by good grass growth and plenty of forage being conserved for winter.
With the autumn store sale season getting underway, there is concern among producers that finishers will simply not be able to afford to pay a sustainable price for their cattle.
Hexham and Northern Marts auctioneer Chris Armstrong says: “There was a lot of apprehension ahead of the autumn sales, but we are advising clients to stick to their current marketing plans for their cattle as their regular buyers are still likely to be there.
“At our recent sale of native-bred young cattle, prices were down about £60-£100/head on the year which is a good result, considering prime cattle prices are down as much as £250 in some cases, and while vendors would always like more for their cattle, they were not too disappointed.”
Other sales centres are also reporting that while prices are generally slightly down on the year, there are still plenty of buyers around the rings.
A major concern is the future of the suckler herd and whether producers will continue to put cows to the bull in such uncertain times.
According to the latest Defra statistics, the total number of cattle and calves in England in June 2019 dropped 1.7 per cent on the year to 5.28 million-head with the total breeding herd standing at 1.83m head, a decrease of 1.4 per cent.
While there is a lot of speculation about the decline of the national beef suckler herd, the figures show it fell by just 1.8 per cent on the year to 699,000, with the dairy herd reducing by 1.1 per cent to 1.13m-head.
According to AHDB, increased use of sexed semen and the subsequent increase in use of beef semen in the dairy herd will mean the decline in suckler bred calves could be compensated for by more beef from the dairy herd, but with the dairy herd also reducing, this should not result in a glut of dairybred beef.
Speaking about the current beef price and its implications, Chris Mallon, National Beef Association chief executive, says: “Although it is what some farmers are asking for, subsidising the beef price with Government money is not the answer. It would be a short-term fix and once that stopped we would be just back to where we were before. It will not result in any longterm price rises
“The Government should take a different approach. The agricultural industry should be booming, with food security at the forefront of policy. Instead, the opposite is happening.
“We need to try to solve the longer term problem. The crux of the problem is there is no competition between processors and this is difficult to change. There needs to be more transparency and the only way this is likely to happen is if legislation is introduced.
“The producer is getting a smaller and smaller share, which means either the processor or the retailer is getting more as the retail price is not coming down, so the consumer is not benefiting.
“Producers are getting £175-£250 less per head than they were at this time last year. On large numbers of cattle, this adds up to a lot of money. They cannot go on like this.
“Saying they will have to pay less for stores is not the answer as store cattle producers cannot afford to take less either. A worry is some finishers will start to use assets to fund buying cattle, which they should not be doing.
“The big concern is the younger generation is not going to want to go into or continue with suckler production and once we have lost the cows there is no going back. It is not something which can be turned around quickly if the situation does improve in the future.
“At the moment the store cattle price is holding up reasonably well and a major reason for this is because they are sold through a transparent, competitive system – auction marts – and this highlights the big difference between the liveweight and deadweight systems.
“If we lose suckler production, it will have a big impact on the rural economy and we will lose the environmental benefits suckler cows bring and their role in producing protein from land which is not suitable for other uses.
“This current situation is driving us towards only having beef from the dairy herd and integrated supply chains and while there is nothing wrong with that type of beef, we should be able to offer the consumer a wider choice of product.”
Mr Armstrong also has concerns about the next generation of beef producers.
He says: “We have dispersed a number of suckler herds over the last three years and there are always buyers, possibly as a result of some producers buying older cattle to plug gaps in their herds, rather than going out and buying heifers until they see how the market is looking.
“There is certainly some consolidation in the sector and some will be looking at economies of scale but we are in for big changes in the industry.
“There is an aging demographic of farmers, particularly in the suckler sector. If there are any new entrants to agriculture they cannot afford to stock a farm with cattle if they cannot demonstrate there will be a return on their investment.
“The younger generation also has different expectations on work/life balance and rightly so. They have seen their families work all hours in all weather for little or no return and they are not prepared to do the same.”