The co-op umbrella body leader’s call for mart consolidation was just one of the measures for the live animal trade discussed at a joint Oireachtas committee meeting yesterday, gathered to discuss possible learnings from the closure of cattle exporter TLT International.
Mr O’Donohoe highlighted several learnings from the TLT experience, primarily focused on pressures relating to access to credit. Some of his views were echoed by executives speaking for the IFA, ICMSA and ICSA, all of whom agreed an examiner could have been appointed initially rather a receiver.
“The decision by HSBC Bank to appoint a receiver was disappointing,” he said. “TLT’s sales turnover was around €1.2bn. Our estimates suggest the collective exposure of the marts and farmers was around €3m or €4m. As we understand, TLT had received stock but had not yet paid for it.
“We believe that the marts have the strength in reserves to survive this shock. We are also looking at the marts’ credit policies. The banks’ approach to credit has led to a lot of caution among suppliers, and ICOS suggests that there should also be consolidation and rationalisation in the marts.
“We are not talking about closing any marts, but rather bringing a number of marts into one centre to achieve economies of scale. This will free up some of the credit pressures, and reduce some of the competition pressure between marts, who compete between themselves in terms of credit periods, etc.
“We would also like to reduced the dominance of a small number of meat plants around the country,” Mr O’Donohoe said.
IFA president John Bryan said when news of TLT’s closure broke, the IFA immediately met the receivers to demand that farmers be prioritised in the payments being made to creditors. “We urgently need clarity on behalf of the receivers on the extent of monies owed to creditors,” added Mr Bryan.
The Oireachtas committee discussed the industry fallout from the decision by HSBC to pull its credit lines to TLT, and the appointment of Gearóid Costelloe as receiver.
Owned by the Garavelli family, and mostly involved in exporting high-quality weanlings to Italy, TLT International had made 25 workers redundant.
ICSA president Gabriel Gilmartin said early indications were that the bulk of the money was owed to marts. He said he believed the marts had been properly run over the years, and their diligence in managing credit risk would ensure their survival.
The ICSA leader said there would be lingering doubts about whether HSBC made a mistake in allowing credit facilities to develop the way it did.
He said the Government should closely analyse the impact of TLT’s closure and not presume that other exporters could take up the slack in terms of exports developed into the Italian market. He called on the State to examine all credit options, such as measures to underpin credit terms to exporters now that HSBC’s €3m in credit was no longer available to the sector.