Beef sector is still strong and enjoying rising profits, writes Seán Mac Connell, Agriculture Correspondent

A midlands sugar beet farmer yesterday described the run up to the closure of the Mallow sugar plant as similar to sitting up with an old and ailing relative.

"You know they are going to die but when they do it still comes as a shock," he said.

The death of the sugar industry had indeed been expected and the terminal diagnosis had been delivered in November 2005 when the EU's restructuring package was agreed.

The temptation to end for good the 155 years of beet growing and processing was just too much when so much EU compensation was on the table.

Now, as the row over the spoils is about to heat up, Ireland's tillage sector has to look for alternatives crops and 230 full and part-time workers will have to look for other jobs.

The growing of sugar beet has for the past decade been in the hands of 3,700 growers who are Ireland's top tillage farmers.

One of the immediate consequences is that Ireland's place at the top of the world league table for the highest grain yields in the world will be lost. That is because sugar beet was a wonderful rotation crop and grain harvests grown where beet had been grown the year before gave additional yields of as much as one tonne per acre.

This in turn could impact on cattle numbers as some of the larger farmers who compound their own cattle feed may cut back on their operations.

But the hit on the sugar sector is just one of many potential difficulties coming down the line towards Ireland's farming and food sectors.

So far, more than a year into the new EU system of farming without direct subsidies, no one is feeling too much pain just yet. Nevertheless, the Minister for Agriculture and Food, Mary Coughlan, will face pressure from farm groups if agricultural incomes start to drop.

However, those who believe that Irish agriculture is going to lie down and die had better think again because it appears the sector is up to the challenge.

In the beef sector, producers and factories have been having a profitable time since December when cattle prices began to improve.

A lowering in the number of available cattle for slaughter, coupled with export restrictions in Latin America because of foot-and-mouth and increased demand from continental Europe, has lifted prices.

From an Irish point of view, avian flu has also been beneficial to the sector as it has driven up demand for beef in the prime markets.

In addition, for domestic political reasons, Argentina has banned the export of beef for six months to force down home prices and that is creating a gap in the German market which the Irish hope to fill.

However, British beef will be allowed back on to world markets from April and the industry here is still assessing the impact this may have on the EU marketplace.

Bord Bia believes that the British industry, which has been ravaged by BSE and foot-and-mouth in the past decade, has not yet the capacity to cause many problems to Irish marketeers.

Irish exporters are planning on losing up to a quarter of the UK trade when the sector eventually gets back on track again, but this could take up to two years.

In the past ten days, the EU cut export refunds on beef by 10 per cent because of increased consumption in the EU and rising prices. While the beef factories have complained that this will limit their ability to compete in markets in places like Russia and some of the Arab countries, this is thought to be unlikely until the autumn.

In the dairy sector, the number of farmers involved in the industry continues to drop but the output remains the same and these progressive farmers are hoping that they will be allowed produce even more milk.

Following a decade of good times, the dairy markets had taken a downturn over the past two years, but it has made some recovery in the past three months.

As in all businesses, the farmers who produce the 1.1 billion gallons of Irish milk know that they must increase in scale to cope with new realities.

The Agri Vision 2015 report published last year predicted that by that date there would be only 12,500 viable dairy farms, but there are indications that this figure may be reached long before that.

There are just over 24,000 dairy farms now, but many of the older farmers are getting out and passing on their farms to their sons who are expanding the operations.

Concern over whether or not the milk quota system will remain in place in its current form has slowed down this rationalisation process but it has not stopped the relentless march of time which has meant a lot of the older farmers have been quitting dairying.

The Irish Operative Organisation Society has been attempting to bring co-operatives together in the knowledge that there is far too much processing capacity in the country.

This work has not had a dramatic impact, but in some areas long-term rivals, and even enemies, are now cooperating in the collection of milk from farms - one of the most expensive operations for a milk processor.

Next week, the Government will be publishing a blueprint for Irish farming and it is likely to recommend further amalgamations of creameries.

It is also expected to recommend that Irish meat plants co-operate in processing the cattle, sheep and pig kill, but this has been attempted before and has failed.

The meat industry is aware that, with falling numbers of animals to process and with carcass weights of cattle dropping, there will have to be some trimming of capacity in that industry too.

Perhaps the best indicator of the health of the industry is agricultural land prices.

Nowhere in the country has there been a drop or a slowing down of these and, if anything, there has been an acceleration in the past year.