Dr. Paul Crosson:

I welcome the opportunity to discuss the economic values and the updates on the Teagasc beef systems model that were applied. I will give a small bit of background on the Teagasc beef model. It is a farm systems model so it is a bioeconomic model that describes the whole farm system in terms of its economic and environmental impacts. It is very widely published. It has been internationally peer reviewed and, in fact, the model has been adapted for beef systems in Scotland, Norway and other Scandinavian countries and Uruguay, and we are in discussions with colleagues in Brazil who are interested in taking the model and adapting it for their circumstances. It is a very widely used model and international peer reviewed.

On how we adapt and use the model from the perspective of economic values, we design a production system representative of suckling farming in Ireland. That is challenging because we know there is massive variation in production systems in Ireland. For each trait that has an economic value, we change that by one unit. For example, with age at first calving, we change age at first calving by one day and we assess and quantify the economic impact of age at first calving. We first used this model in terms of the economic value updates for the breeding indexes in 2012. Prior to that, there was a single breeding index. In 2012, it was separated into a replacement and a terminal index so the Teagasc beef systems model was then applied to generate the economic values for those updates. The economic values and the model are always evolving and developing. We updated the economic values and revised the figures in 2015 and we have carried out the same exercise again this year. As Mr. Coughlan said, the previous updates were reasonably standard. The economics had not changed hugely but it was warranted to change them regardless. Clearly the economic impact, in particular in the most recent updates to the index, have been much more substantial.

That is basically down to what we see every day in terms of input costs. It is not just in farming but in all sectors of the economy. As input costs change for fertiliser, contractors and feed, the economic impact of a unit change in a trait will change accordingly. The greater the change in prices, the greater the change in the economic value. There is no question that the impact of the most recent revisions have been greater than previously.

Coupled with that, there is also a dynamic in relation to carbon and greenhouse gas emissions. We might revert to that a little bit later. As part of these updates, we have now included a monetary value for the emissions that are generated within the beef breeding system or beef cattle production systems. Again, as each trait changes, there are emissions associated with that and we apply a monetary value to that.

Coupled with the large changes we have seen in prices, that has exacerbated the changes in terms of the economic values. It is predominantly a combination of those two factors that have driven the change in economic values. There are some new traits in there as well and we might revert to them as the discussion continues. They are important but probably secondary to the other two aspects that I mentioned.