Angry farmers coming out of their shells

Q&A Alo Mohan, IFA

Poultry and egg producers facing an income crisis because of rising production costs took their case to retailers recently. At issue is a small price increase to reflect an additional cost burden on producers.

Alo Mohan, a poultry producer in Co Cavan, and chairman of IFA’s National Poultry Committee, gives the producer’s perspective.

Poultry and egg farmers are under severe financial pressure, at the moment, and have been for the last number of years.

There is a massive disconnect between retailers and producers.

When the cost of production rises, farmers generally have to wait months for farm prices to rise.

To date, broiler-chicken farmers have received nothing, and increases for egg producers will not cover costs.

What are the specific cost issues on farms?

With egg producers, the price of feed is the major problem, and, although some increase to cover this has been passed back, it was not enough, particularly as other inputs, such as the price of replacement pullets, have also rocketed. Farmers are now not in a position to replace their flocks, which is making them unviable. Although feed remains a huge issue within the integrated chicken-meat system, we have been informed that feed-price increases have been passed back to the processing sector.

However, this was not enough to cover the price of feed, which meant that processors failed to pass anything to producers, who have incurred massive cost hikes, particularly for energy.

Global grain prices are at their lowest for some time. Will this trend not rescue Irish poultry farmers?

The problem with falling, global grain prices is that retailers will use this as an excuse to ignore the plight of farmers.

Yes, the price of feed should be lower, and this should reduce production costs for egg producers and broiler-meat processors, but this does not help to pay the bills that have been accumulated on farms, and it will have no impact on the price of energy.

Losses on farms have been absorbed through extended credit, merchant credit, loans, or borrowing from other resources to stay in business, and all of these must be repaid before the farm can be considered secure.

A higher price base is vital to secure the future of the industry. Farmers are not being properly paid for the quality assured product that they are producing, and this cannot continue indefinitely.

The focus of the recent protest was very much on the retailer. Is this where the problem lies?

Our home market is extremely important, and, therefore, any purchaser on the island has a role to play, whether butchers, retailers, hotels, trade, and the State.

Retailers are distancing themselves from the problem on farms by claiming that they do not buy anything from farmers, and that their supplier is the processor. Claiming that they deal directly with farmers and putting the farmers’ faces on their packaging is simply a ploy to gain market share, when they do not seem to actually care about the survival of this family-farm structure.

They apply inordinate pressure on their suppliers for high standards, and then refuse to pay the price needed to cover the cost of these high standards.

The processing sector has also been severely weakened by the availability of imported products coming into Ireland. In the first quarter of 2013 alone, the volume of imports increased by 14%, with 3,000 extra tonnes of fresh and frozen breast meat disappearing into the food chain.

Processor after processor has folded in Ireland over the last number of years, as they simply couldn’t compete with imports.

How do you see this issue being resolved?

The retailers themselves must address the difficulties on farms, as an immediate priority. We have met with all of the major retailers, and have been assured that they will meet with the processors again.

A level of transparency, however, is required; farmers are seeking increases, not to profiteer, but simply to stay in production, and they understand that this works both ways.

Farmers know how much they are being paid (currently 17c/kg, with the feed and chick supplied), and they know how much the retailer charges (approximately €5.50/kg), but they have no idea what happens in the middle.

Wholesale prices are a mystery, but with so many processors unable to survive, it would indicate that the profitable side of the chain is not upstream.

Government has a responsibility to fast-track country-of-origin legislation, which would prevent retailers and others passing off imports as Irish product. Government could also source more Irish meat in public procurement.