Accountant Seamus McCaffrey has confirmed to the Impartial Reporter that beef margins are under significant pressure at the present time.

He said: “There is a complete lack of confidence within the beef sector at the present time. Prices are below the cost of production and producers are confused regarding what specification they are expected to meet in order to get the best from the marketplace.

“In the first instance, something has to be done to improve farmer confidence when it comes to doing business with the meat plants.

“The prospect of a reduction in concentrate feed and silage costs this winter will come as some relief to beef farmers. But the reality remains that an uplift in the beef market is the only means by which livestock farmers can expect to return to profitability.” Seamus went on to confirm that it is sucker beef producers, who are most exposed to the volatility of the marketplace at the present time.

“Suckler cows are inherently unprofitable at the present time,” he stressed.

Turning to the issue of how livestock farmers can manage the finances of their businesses at the present time, he said: “Producers must do everything they can to reduce their costs. Outstanding bills should be paid now, and where possible, without extending farmers’ overdraft facility with the bank.

“There are obvious tax implications associated with the present economic pressure that is impacting on the livestock sector. I would, therefore, urge farmers to talk this matter over with their accountants as a matter of priority.” Turning to the dairy sector, Seamus indicated that the breakeven milk price for many dairy farmers, particularly those on poorer land, is 27 pence per litre. He added: “Producer prices have fallen significantly over recent months and given the most recent trends recorded at the Fonterra Auction and the food import ban introduced by Russia, there is now every prospect of this downward farmgate price pressure being maintained for a period of time of yet. What we are also seeing is volatility starting to become apparent in a meaningful way on international commodity markets. ” In light of these developments, Seamus is advising milk producers to seek ways of cutting costs.

“Given the current falls in world grain prices, the forward buying of feed might be an option for some farmers,” he explained.

“The same principle also holds where fertiliser is concerned. I am also advising clients to clear outstanding feed, fertiliser, contractor and AI bills now. And, if possible, without adding to their overdrafts!

“Given current circumstances, farmers should resist the temptation to overstock, as this will only tie up capital that could be put to other uses.” Looking further ahead Seamus also confirmed that many local dairy farmers will be facing considerable payments to Revenue and Customs on January 31st and July 31st next, based on farming profit for year ended 5 April 2014.

“It is important that the size of these payments is quantified now, so that producers put in place a plan which will allow them budget these payments into the future. It goes without saying that farmers should also talk to their accountants on these matters,” Seamus concluded.