Harnessing the opportunity

Justin McCarthy Editor, Irish Farmers Journal

Opportunities for Beef production

• We are in the business of producing premium proteins

• Demand for these proteins is set to rise

• Our consumer is no longer European

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Projected Population Growth (UN medium projections)

Region 2012 2050 • World 7,053 9,150 + 30% • Africa 1,072 1,998 + 86% • Asia 4,216 5,231 + 24% • Latin America 596 729 + 22% • North America 346 448 + 29% • Europe 740 691 - 7%

Population growth & economic growth to drive demand

• 25-30% demand growth from increased population

• 70-75% driven by economic growth

• 40% of the worlds population living in countries that are recoding economic growth of 8% per annum.

• The number of middle class in China and India forecast to increase by 1.2 billion over next 20 years

Economic growth effects

Income level per capita

Effect of economic growth on food consumption

$10 per day Increase spending on services/quality (convenience, brands, fresh/cooled)

Economic growth effects

• Increase demand for dairy products will require a New Zealand every 10 years

• 10% increase in income equates to a 5% increase in beef consumption

The China factor

• Growth in urbanisation – 1990 - 26% – 2012 - 50% – 2035 - 70%

• Increased consumer spending power – Urban - 20,000 RMB – Rural - 6,000 RMB

Potential threats to future profitability

• Price volatility – Global market much more volatile

• Weather • Food scares • Government policies

– Limited range of cushioning measures applicable for family farms

– Government intervention – Trade deals – CAP

Potential threats to future profitability

• Lack of technical efficiency

• Markets should support efficient producers

• We should not expect markets to support inefficient production systems

• Higher prices will not safeguard profitability

Does Technical Efficiency Pay

Output – Inputs = Profit • Three P’s

–Price –Performance –Production costs

Does technical efficiency pay?

NI suckler beef project

Technical efficiency does pay

Technical efficiency does pay

• Initially three year pilot programmes • Established in 2009 and 2010 • Demonstrate the potential to turn efficiency into profit

Turning efficiency into profit

• Gross output per ha increased by 30% – Performance at grass – Stocking rate – Herd productivity

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Turning efficiency into profit

• Variable costs down 4.7% – Grass – Lower meal – Adapting systems – Fertilizer usage

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Turning efficiency into profit

• Increase by 125% – Worth on average €28,379

(£22,000) – Farmers achieving GM

+€1000/ha (£760) – Net Margins €700 (£550) – 66% technical efficiency – 33% increase beef price

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Gross Margin

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BETTER Farm - turning efficiency into profit

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66% of the increase in gross margin derived from improvements in technical efficiency

System performance

Gross Margin Table 1: Comparison of gross margin per hectare phase one farms 2010-2014

2010 2011 2012 2013 2014 Change

A Cairns £90 £512 £703 £514 £691 +£601

J Dobson £526 £499 £821 £830 £1,086 +£560

J Egerton £265 £495 £652 £688 £939 +£674

J Milligan £509 £564 £793 £771 £1,088 +£579

S Maguire £409 £603 £391 £684 £770 +£361

Average £360 £535 £672 £697 £915 +£555

Gross Margin Table 2: Comparison of gross margin per hectare phase two farms 2013-2014

2013 2014 Change

A Gardiner £256 £594 +£338

J Taylor £693 £1,011 +£318

C Sheeran £167 £520 +£353

O McKenna £412 £502 +£90

D Rafferty / A Quinn £298 £349 +£51

Average £365 £595 +£230

NISBP

John Milligan 2010 2011 2012 2013 2014

Grassland adj area 73 73 73 73 73

Stocking rate CE/ha 1.3 2.06 2.32 2.47 2.52

Avg cow numbers 44 48 53 61 65

GM/ha 509 564 793 771 1088

GM/cow 595 588 573 526 814

Output/cow 1118 1194 1144 1196 1301

Variable costs/cow 552 606 572 670 487

Turning efficiency into profit

• Programmes rolled out nationally • 11 NISBP Farms

– 1 dedicated advisor • 32 BETTER farms

– 100 satellite farms – 4 dedicated programme advisors – Information transfer through Farmers Journal

Teagasc/Irish Farmers Journal BETTER Farm Beef Programme

It is not about breed type

It is not about winning rosettes

It is about maximising profit

Getting the breeding mix right

Know your limitations

Weight and quality key to output

Value of 200kg-300kg Weanling bulls Weanling type Price/kg Avg quality €2.35/kg Top 33% €2.77/kg Top 10% €3.01/kg

Value of 300kg to 400kg Weanling bulls Weanling type Price/kg Avg quality €2.14/kg Top 33% €2.46/kg Top 10% €2.65/kg

Weight and quality key to output

200kg-300kg Quality Value Avg €588 Top33% €693 Top 10% €753

300kg-400kg Quality Value Avg €749 Top33% €861 Top 10% €927

Price per kilo is no indicator of how good your breeding programme is

Cow type the foundation stone

Impact on output

8.7l milk 1.18kg gain Calving interval 365

5.7l milk 0.97kg gain Calving interval 395

Calving date Output Calving date Output

Year one January 300kg - -

Year two February 350kg February 306kg

Year three February 350kg March 280kg

Year four February 350kg April 250kg

Year five February 350kg May 220kg

Year six February 350kg June 190kg

Year seven February 350kg July 165kg

Year eight February 350kg August 135kg

€5500 @ €2/kg

€3092 @ €2/kg

€3.55/kg

Driving grass growth – not rocket science

• Weekly grass measurement • Re-seeding • Nutrient utilisation • Soil P&K • Drainage • Grazing management • Increasing stocking rate

– Grew 12/t grass DM/HA in 2014 – Every extra t/ha = €160 (£120)

Driving grass growth Table 1: Grass Growth and yield - region 1

Farmer

County

Avg daily growth 2014

(kg DM/ha/day)

Avg daily growth 2013

(kg DM/ha/day)

Grass yield 2014 (tonnes DM/ha)

Grass yield 2013 (tonnes DM/ha)

Mike Dillane Kerry 47 51 9.9 9.2

James Kenneally Cork 66 55 13.8 10

Ger Dineen Cork 72 54 15.1 9.8

Donie Aherne Limerick 54 57 11.2 10.2

Donal Scully Limerick 64 78 13.4 14.1

David Walsh Tipperary 62 59 13.1 10.6

Billy Glasheen Tipperary 77 57 16.2 10.3

Mark Maxwell Westmeath 57 55 11.9 10.0

Additional focus on

• Performance monitoring – Financial – Physical

• Herd health • Feeding regimes • Doing simple things right

To conclude

• Global demand for meat proteins will increase • Prices will continue to rise but oil prices an

issue • CAP revision likely – current policy flawed • Price only one part of profit • Need to address technical inefficiencies

– Breeding performance – Grassland management

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Harnessing the opportunity

Justin McCarthy Editor, Irish Farmers Journal

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Harnessing the opportunity Opportunities for Beef productionSlide Number 3Projected Population Growth �(UN medium projections)Population growth & economic growth to drive demand Economic growth effectsEconomic growth effectsThe China factorSlide Number 9Slide Number 10Slide Number 11Slide Number 12Slide Number 13Slide Number 14Slide Number 15Slide Number 16Potential threats to future profitability Potential threats to future profitability Does Technical Efficiency PayDoes technical efficiency pay?NI suckler beef projectTechnical efficiency does payTechnical efficiency does payTurning efficiency into profitTurning efficiency into profitTurning efficiency into profitBETTER Farm - turning efficiency into profitSystem performance Gross MarginGross MarginNISBPSlide Number 32Slide Number 33Slide Number 34Slide Number 35Slide Number 36Slide Number 37Turning efficiency into profitTeagasc/Irish Farmers Journal BETTER Farm Beef ProgrammeIt is not about breed typeIt is not about winning rosettesIt is about maximising profit Getting the breeding mix rightKnow your limitationsSlide Number 45Slide Number 46Weight and quality key to outputWeight and quality key to outputCow type the foundation stoneImpact on outputSlide Number 51Driving grass growth – not rocket scienceSlide Number 53Slide Number 54Slide Number 55Slide Number 56Slide Number 57Driving grass growthAdditional focus onTo concludeSlide Number 61Harnessing the opportunity Slide Number 63Slide Number 64