Meat factory price cuts ignore surge in demand

In recent weeks the meat factories have cut Irish cattle prices by up to 40c/kg, or €150/hd, opening up a major price gap with prices in our main export market in the UK. The IFA have reacted strongly, reflecting the farmer anger on the ground with the factories.

An emergency meeting of the IFA executive council and national livestock committee, which was attended by an Ulster Farmers’ Union group, was held in Portlaoise last week. IFA county officers and livestock farmers have met with meat plant managers in every county. Henry Burns, IFA national livestock chairman, outlines the impact of the factory price cuts on farmers and the livestock trade.

* Factories have cut cattle prices severely in recent weeks. What is the real market situation? Was this move justified or not?

>>At a time when cattle supplies are extremely tight, and market returns in the UK and Europe are very strong, the factory price cuts were totally unjustified. The facts are: weekly supplies are running at 26-27,000 head per week. UK cattle prices are equivalent to €4.50-€4.60 and European markets are returning over €4/kg. Factories have opened up a 60c/kg price gap with the UK. This cannot be justified.

* What impact has this had on the ground with farmers?

>>Farmers are angry with the factory price cuts and the way the severe weather difficulties had been used against them to undermine confidence in the cattle trade. The weanling and store cattle trade at the marts has also been damaged, and this affects every livestock farmer in the country. Farmers cannot tolerate this kind of abuse and damage to confidence in the livestock trade.

* Given the atrocious weather over the summer, what is the effect of the price cuts on individual farms?

>>Farmers are under severe financial pressure after the worst summer weather in living memory with fodder in short supply and massive price hikes in feed, fertiliser and diesel resulting in serious cash flow problems. Teagasc have already estimated that incomes will be down by 30% this year and on some farms, particularly in marginal land areas, the income losses will be much higher. The latest round of factory price cuts has severely compounded the income problems and is another blow to farmers. Based on the market returns, the price cuts were avoidable. The factories have made a grab on the price for short-term gains, instead of building confidence in the trade on the back of the positive market returns and in line with the Food Harvest 2020 targets.

* IFA held a crisis meeting on the beef price situation last week. What has taken place since then?

>>IFA officers in every county have met local meat factory managers and left them in no doubt about farmer anger over the latest price cuts. IFA has made it very clear that the price cuts are totally unjustified and the wide price gap opened up with the UK market must be closed. Farmers have also made it clear that unless the factories pay a fair price based on market returns, production increases under the Food Harvest targets will not happen.

The president John Bryan and myself have met the key factory bosses with Meat Industry Ireland this week and told them in no uncertain terms that farmers are not going to tolerate price cuts which do not reflect market returns. Farmers are not going to allow the factories rip confidence out of the important livestock trade for their own benefit.

The factories had no argument with the Bord Bia market prices put forward by IFA to show that Irish cattle prices can rise. The facts speak for themselves and Irish prices can increase, based on the UK market returns of €4.50-€4.60/kg and EU prices of over €4/kg.

With the positive change in the weather this week, farmers are not prepared to sell at the lower quoted factory prices, and are demanding up to 10c/kg more.

Some factories have had to pay 5/10c/kg more this week to get stock, particularly in the east and northern parts of the country. Factories are finding it almost impossible to buy cattle at the quoted price, as farmers are extremely busy at the harvest and with fodder. Supplies have tightened rapidly.

In addition, a number of factories have increased their kill days, lifting demand.

* What action do farmers want Agriculture Minister Simon Coveney to take?

>>Under the minister’s Food Harvest 2020 plan, the factories have a responsibility to pay a fair price in line with market returns. Farmers want Minister Coveney to call in the factories and put it up to them to honour their responsibilities for the future of the sector.

Farmers want Minister Coveney to travel to North Africa and the Middle East to re-open and secure the important live export trade to key markets such as Libya, Egypt and the Lebanon. These markets are vital for price competition and outlets for increased volume of stock coming down the line.

Under no circumstances can Minister Coveney consider any cuts to agriculture or the farm schemes in the forthcoming budget.

He must also ensure that all of the direct payments are made on time and in full, including all inspection cases. Specifically, on the beef side, Minister Coveney must maintain the Suckler Cow Welfare Scheme, which is vital to the suckler cow herd.