Stephen Cadogan: Beef producer organisations would be the game changer

Agriculture Minister Simon Coveney said last week that a lot of farmers are telling him they can’t buy animals in the marts now, because of the high prices.

It’s a big change since he was accused last year of failing to act, when low prices left cattle farmers losing money.

Beef prices rising 15% since last September have turned the industry around.

The worry for Minister Coveney now is that if the price weakens, people who have bought dear animals are exposed. “That said, farmers need to make their own business decisions.”

“The combination of killing fewer animals, opening new markets and less availability of beef generally across the EU should mean that we should have strong pricing through this year, but one never knows with beef. Things can change quite quickly.

“I would be hopeful that we will have a very strong year this year. Certainly farmers are anticipating that we will have a very strong year. ”

He reminded farmers, “We cannot expect beef prices to increase every week, they will go up and down slightly, but as long as the graph is moving upwards, then we are in quite good shape.

“We will have to see if prices increase or stay the same, but there are only so many things I can do as Minister. I cannot instruct factories to pay more. I cannot get into the space of negotiating price. Anytime I do mention price, I seem to get a letter from the Competition Authority.”

He said a lot of people have said that the only reason the beef price is up is that the kill is down, but that is not true.

“If anything, the kill so far this year is slightly up on last year. That said, the anticipated number of slaughtered animals this year will be 110,000 to 120,000 less than last year. That is the indication that we have at present, in terms of calves coming through and so forth.”

Irish prices are at about 105% of the European average, said Minister Coveney.

“That would suggest we are in a premium category. We export to the UK, and sterling is strong at the moment, which is a good thing.

"We are now the only European country that can sell to the United States and to China. We may also be the only European country that can sell to Japan.

"As a Government, we are doing everything we can to create the conditions for buoyant beef prices, but I cannot micro-manage pricing at factory level.

"In fairness, I do not think I am being asked to do that, but when there are structural issues in the market, the Beef Forum is there to address them.”

He said he will continue to facilitate live exports to ensure the prices being paid in Ireland are competitive.

And on speculation that Ireland could sell €75m of beef to China, the Minister said it “might be an accurate estimate”. He revealed he will take a trade mission to China in the second half of the year “to ensure we do everything we can politically to open doors for the beef industry.”

“The same applies to exports to the US, which is also a very exciting market.”

But he still sees beef producer organisations as the game changer.

“The big thing we will do between now and the summer is to produce a recommended structure for beef producer organisations which will be able legally to negotiate price with factories, under the new CAP.

“That will change fundamentally the relationship between farmers and factories for the better. One will have farmer-owned producer organisations who might be negotiating with factories on behalf of 1,000 beef farmers.

"They will have real volume to negotiate with around price, spec and market conditions. It will be a two-way communications as they will also be able to communicate with their farmers in terms of what kind of animal and what spec, age and weight will get them the maximum price.

"Likewise, they will be able to negotiate aggressively with factories in a way that moves us away from farmers being simply price takers. This will allow farmers to negotiate collectively on a legal basis. That is not the case at the moment for farming organisations. It will make a difference.”

Hopefully, beef producer organisations will also prevent the kind of over-reaction which has led to sky-high store cattle prices after just a 15% price rise for beef.

Groups acting on behalf of 1,000 beef farmers can be expected to make better decisions at both the buying and selling ends of the business.


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