Beef farmers gathered at Kilkenny Mart on Tuesday September 13 for the Teagasc Winter Beef Finishing information event.
One of the speakers for the evening was Jonathan Forbes, Kepak Group Purchasing Director, who provided insight into the market from both his personal perspective and Kepak’s perspective.
Farmers at the event listened closely to the Purchasing Manager who is a major player in the Irish livestock sector, overseeing the purchase of over 280,000 cattle as well as 650,000 sheep for Kepak’s operations in Ireland .
In addition to this, Forbes operates the Kepak farm in Clonee, Co. Meath, which finishes 3,500 to 4,000 cattle per year.
Kepak processes approximately 500,000 cattle, 1.7 million sheep and nearly 400,000 pigs in its UK and Irish operations.
Commenting national livestock supply, Forbes said that through last week more than 96,000 additional cattle had been processed (including veal) this year, representing an 8.7% increase over last year .
“The number of main kills increased by 6.1%, the number of cow kills increased by 15.5% and the calf and bulls increased by 21%,” he said.
Bord Bia, he added, forecasts that the national livestock throughput will increase by 119,000 cattle.
“We are looking at an average weekly throughput of 36,000 cattle through the end of the year,” he said.
“Some weeks there will be more cattle and some weeks there will be less cattle.”
He added that next year cattle supply is expected to fall by 2% and said, “Kepak’s goal is to work with suppliers to ensure we have beef to meet the demands of our customers in the first six months of 2023.
“That’s how it works, we don’t turn on and off, it’s a 52-week rolling supply agreement.”
Due to current costs and risks, Forbes believes beef finishers will “stay close to the market” when making decisions about raising cattle.
He thinks finishers will stay “within 60 days of showdown,” where they’ll have a better view of the market and can activate from there.
“When I started shopping 20 years ago, I bought R-grade steers at £1.96/kg. Today, we are close to the 5 €/kg mark. In 20 years, that’s where we’ve come to.
“There are fewer beef imports from non-EU countries and there is an increase in global demand on world markets. Asia takes beef from South America and Australia, which prevents it from entering Europe,” he said.
Steak slow but ground meat sales skyrocket
Forbes told farmers at the information night that demand for ground meat products “has skyrocketed”.
“The demand for beef manufacturing has skyrocketed and there is a reason for that. Consumers turn to cheaper beef; they are moving away from steak cuts, striploin and tenderloin in terms of value are back about 15% year over year,” he said.
He continued, “So you wonder how we pay more for beef. Round cuts are pretty much “upright” and rib cuts are between 1-2% in value.
“The casing part is the part that has compensated on the casing value return compared to last year.
“It’s because consumers have exchange. They went from cutting steaks to making meat.
“The burgers, mince and meatballs supported the cost of the animal and given the 19% increase in carcass value. This is a trend that I personally see continuing as well.”
Giving his own view, Forbes said he expects demand for meat making in retail and catering continue to increase.
He explained that there is a reduction in steak meat consumption as consumers dwindle and said that at times this year “significant volumes of steak” were in cold storage and the sales teams had to wait for “the right opportunity to move some of it”. .
“The gray area is how many people are going to eat steak in the next 7-8 months and I’m pretty sure the market will be for burgers and hash.”
Despite current trade trends, Forbes affirmed the importance of customer specifications for beef carcasses, stating, “We deal with high-end retailers in Europe and we want to give them the best beef to retain and grow this business. .
“At Kepak we look for the perfect specification animal to service these retailers and that comes from the quality finish that is put on the cattle.
“A carcass quality of O= or better with a fat score between 2+ and 4= is still our business, what we want has not changed.”
Forbes mentioned the impact of recent world events on global supply chains and said Irish beef customers are looking for ‘resilient supply chains’ and need ‘more consistency and certainty’.
For this reason, he explained that Kepak “needs more certainty and consistency” from the suppliers it works with.
At the briefing, he told the farmers he believed “the people who can come up with the best integrated supply chain that provides certainty for both the farmer and the customer will achieve the most.”
He said that every actor in the supply chain wants specific insurance.
“The farmer wants a good calf and a level of certainty on input prices as well as a guaranteed minimum price or premium market price,” he said.
“The processor wants consistent quality that will meet customer specifications.
“The customer wants certainty of supply, market specification and sustainability, while the consumer wants sustainability, value and meat quality.”
Forbes believes that models, such as Kepak’s Twenty20 Beef Club, which offer an above-market price, are the future of beef production in Ireland.
“That’s the policy we have and we want to improve sustainability for the 20,000 farming families we work with,” he said.
“Ireland has a huge reputation as a resilient beef supplier and we need to collaborate to find solutions to work better together.
“Kepak thinks we need to move away from the model where the farmer feels like the price taker towards more roles of supply chain partners and provide them with more certainty.”
Commenting on the request, he said, “I need 5,500 to 6,000 cattle per week. We have supply contracts, but we may not have contract prices, so we need beef to supply our customers.
Forbes told farmers that 88% of cattle transformed in Kepak has two or less agricultural residences.
“When we analyzed cattle movements, we could see that cattle with no movement were the youngest in terms of age at slaughter, followed closely by cattle with one and two movements,” he said. he declares.
“When we moved to three and four movement cattle, age went up and carcass weight went down.”
Beef Price Forecast
Commenting on the price of beef that winter finishers can expect this season, Forbes was quick to say, “I can’t predict the future when it comes to price, but I can say the short term is very positive as it is now and a short finish is the only finish that will work this winter.
“I have no reason to doubt why the [beef] market is not going to be strong, especially in April, May and June. I think supply will be tight then because it always has been.
He advised beef finishers to “stay close to the market and have cattle in a position that you can activate 60 days before finishing and you have a view of the market. That’s the only advice I can give you tonight.
Forbes explained that “there is massive divergence” in beef cattle from the dairy herd.
“Dairy beef is one of the best beefs we process because of how it’s finished and how old it is finished, but there’s a problem with the dairy bull and it’s a problem for industry,” he said.
“We also have a challenge around raising calves. If you look at the statistics for the last five years, only 40% of the people who raised dairy calves five years ago continue to raise dairy calves.
“It is a challenge for the sector and it is a challenge for which the meat industry can work with the dairy industry to find solutions.”
Forbes responded to a comment from a farmer in the crowd about the low level of young people involved in the sector and acknowledged: “It’s a problem for us to get people into the sector.
“At Kepak, we are trying to find new ideas and solutions to give young people a roadmap and more certainty to continue producing beef, but we don’t have the silver bullet to give people contracts.”
The event ended around 10.30pm and other speakers for the evening included Irish Farmers’ Association Livestock Chairman Brendan Golden, as well as Teagasc’s Paul Crossan and Mark McGee.