Machiavellian market forces
The frustrations of harvesting the premia led many farmers to say they would rather “live or die” according to supply and demand. Their chance has come, but farmers have also learned that the market for farm products in Ireland is not a transparent scenario where supply and demand alone determine the price.
Instead, judging from recent interaction between farmers and processors, it is a scene of Machiavellian scheming where one side constantly strives to outdo the other.
And individual farmers are more likely to end up on the losing side, against large-scale buyers.
Efforts to interfere with market forces happen even in the co-ops where farmers themselves have a stake in the ownership.
Pig farmers say that Dairygold Co-op has left them in danger of a price collapse, and in fear of not being able to get any processor to take their pigs.
Tillage farmers say Glanbia’s €95 per tonne for feed grain will put them out of business. Although it has a minority farmers’ shareholding, Glanbia’s grain added value from its milling operation, and the premium it gets from Guinness for malting barley, are not reflected in the price to farmers, according to IFA.
The Cattle and Sheep Farmers Association says beef processors are currently deliberately backing up intake of cattle which they know will go over 30 months of age in the next few weeks.
This worked well for them in September and October of 2003, when prices weakened due to 33% of the total steer kill being over 30 months of age (43% of all cattle reach 30 months of age in these months).
ICSA wants farmers to respond by holding back cattle over 30 months of age, to create a scarcity.
ICSA also alleges that beef processors are not reflecting the superior value of R grade cattle over O grade in their prices.
The gap should be at least 8p/lb, says ICSA; in France, it is 14p/lb.
Meanwhile, IFA says that Superquinn’s “reckless move” to sell vegetables below the cost of production will lead to large scale instability and losses for 200 vegetable producers, and could lead to a price war that could bankrupt farmers.
Dairy farmers said recently that co-ops should not base their milk price decisions solely on the Irish Dairy Board Skim Milk Powder and butter index.
Far from being an accurate market guide, it is about 0.5 cent per litre (in terms of milk price) behind the full Irish dairy product mix, according to IFA.
It’s bad enough that Irish farmers depend on unreliable markets like Russia, threatening to close its €1.3 billion per year meat trade with the EU at the end of this month, unless it reaches a food safety certification agreement with Brussels.
Much nearer to home, by the time the market price trickles down to farmers, it may no longer relate to those forces of supply and demand.
