The high cost of success
It may well be so.
After all, this is the land of Celtic Tiger inflation which sent our wage costs, local authority charges, commercial rates, professional fees and energy costs soaring above our competitors.
And selling from our strong euro currency area into the weak sterling area has become about 33% harder over the past year, as we neared parity with sterling.
The industry which has bucked the trend and achieved the near impossible in terms of competitiveness is the beef industry.
It has been rewarded with huge sales in Britain, becoming by far the biggest source of beef imports there.
Unfortunately, our €847 million per year beef exports to Britain come at a huge cost to farmers. Even British beef farmers have been complaining that Asda and Sainsburys, two of Britain’s top four retailers, sell only 68% and 45% respectively of fresh British beef.
They say it is not a coincidence that one of Asda’s major suppliers is Irish Food Processors, which under the AIBP banner owns eight processing plants in southern Ireland, as well as 15 processing and packing plants in Britain, and that Irish Food Processors is Sainsbury’s exclusive supplier.
The secret of their success, according to the National Beef Association which represents British beef farmers, is that they have access to Irish cattle, which they can buy about 13% cheaper than British cattle.
Efficiency of production enables Irish farmers to sell their cattle cheaper. But many of them have crossed the thin line between efficiency and a level of economic hardship which their counterparts in Northern Ireland or Britain are not willing to accept.
British farmers say cheap Irish cattle are driving British cattle prices below what efficient feeders and breeders need to cover their costs of production.
As a result, the British beef herd is shrinking (and beef from its dairy herd is shrinking even faster, as the country’s milk production falls to historically low levels).
Cattle farmers throughout Britain and Ireland can cut production, because they have the single farm payment to fall back on if cattle prices are low. The single farm payment, and rising farming costs, are blamed for the possibly terminal decline in Northern Ireland’s beef industry, with registrations of beef sired calves slashed 12% in the first half of this year, and suckler cow numbers falling since 2005.
Cattle farmers throughout Britain and Ireland are asking themselves how many farmers must give up, before the Irish beef processors are happy.
It is a question also for our government, which started the payout of €168 million from our cash-strapped exchequer last May in grant aid to help our beef and sheepmeat processors.
Even as processors got the cheques, farmers were turning their backs on the factories and exporting on the hoof, in a bid to make some profit from their cattle. Rather than sell at a loss to processors, Irish farmers will export about a quarter of a million cattle live this year.
According to Meat Industry Ireland, representing processors, the increase in cattle going out live is equivalent to the throughput of two beef plants, and 600 jobs in two plants are therefore at risk.
Surely, they didn’t expect farmers to sit back and endure a 7.5% cattle price cut in this very difficult year for agriculture, without reacting.
As the price cut trickled down to the market for young cattle, buyers from the Netherlands, Spain and other continental EU member states snapped up hundreds of thousands of bargain priced cattle.
Even with their weakened currency, Northern Ireland buyers saw great bargains south of the border, with live imports from the Republic increasing five-fold so far this year for calves (to 7,600 head), and three-fold for finished cattle (to 37,100 head).
Ironically, a shrinking northern industry in which too many cattle farmers have been squeezed out of business is being kept going by southern raw material.
And the British farmers who say Irish processors are killing their industry are seeing an increase of over 620% in live cattle imports from Ireland, from only 737 last year to 5,320 head, up to September.
In one way, the beef industry is a great example to the rest of our economy of how to compete in the huge British market. But the sacrifice being made by our cattle farmers for this success cannot continue.
