Beef still an issue for Irish farmers as processors have capacity to manipulate market
The strength of sterling is benefiting Irish meat exporters but the extra margin being achieved by the factories is not being seen by farmers and the gap is widening between Irish and UK cattle prices.
Like many other matters, it’s an anomaly that the beef forum can’t quite seem to get to grips with.
There are loads of explanations for conditions in the beef sector — too many to repeat here.
The fundamental dynamics of supply and demand are important in the equation, but increasingly, the economics of the market are being decreed by the dominance of large-scale processors and multiple retailers.
The continuing consolidation of the processing sector will add to that dominance where the saving being achieved are all becoming rather one sided.
This isn’t just an Irish problem, it’s a European issue and increasingly there is a realisation that it is the European Commission, not individual countries, which will have to get stuck in and sort things out.
That is why a combined delegation of the Irish and UK marts organisations visited the Directorate General for Competition in Brussels last week.
Factories must honour Beef Forum - IFA https://t.co/hqd3YeaL4B pic.twitter.com/TEfPkkr5lO
— FJ Beef (@FJBeef) December 17, 2015
ICOS National Marts and the UK Live Auctioneers Association met the EU head of food taskforce, Philippe Chauve, to seek action at an EU level.
Simply put, the dominant position of retailers and meat processors across the EU must be challenged.
While the issues are complex, there are some simple barriers to competition that need to be dealt with.
For example, in Ireland, the meat processors have a capacity to manipulate the market.
They have effectively usurped the Bord Bia quality assurance scheme.
They have unnecessarily put in place more onerous conditions than are required by Bord Bia.
These conditions have subverted fair competition for livestock and result in a manipulation of trade and pricing in Ireland and the UK.
The Irish meat factories enforce measures through their “quality payment system” where cattle that have moved farms in the last 70 days before slaughter are penalised and do not qualify for the quality payment system bonus.
The bonus is also withheld if cattle have had over four movements from farm to farm prior to slaughter, even if all farms are quality assured.
The measures by the factories radically exceed the provisions of the Bord Bia Beef and Lamb Quality Assurance Scheme which allows for movements between quality assured farms during the final 70-day period prior to slaughter.
The factories’ practice discriminates specifically against livestock marts where meat factories have effectively removed trade in factory-fit animals from livestock marts. Bord Bia is a highly respected state agency.
Its scheme sets out requirements for best practice in beef and lamb production including “the essential quality assurance requirements from primary production through factory processing to final despatch which are necessary to meet customer requirements”.
In addition, “the scheme lays down additional standards to be complied with at each step of the production chain”. (Source: Bord Bia website)
So it’s inexplicable that the factories effectively stop free trade in animals when the livestock comply with regulations in Ireland (as outlined above) and in the UK.
Through their added conditions, the factories interfere with the free trade of cattle in livestock marts where it is common practice, while adhering fully to all animal transfer and traceability regulations, for an animal to be sold from farm to farm as it moves from youth through fattening and on to slaughter.
They are circumventing the marts system which provides a true of the value of livestock.
Frequent livestock transfers are a well understood characteristic of the Irish farm sector, as many smaller farms are not able to take cattle through the full process from birth to slaughter.
They sell them on to the next appropriate farm with full traceability.
The livestock marts are the conduit for this live trade between individual farms.
This benefits everyone in the livestock industry and it ensures a fair and open price.
Irish factories have also developed very large owned and rented feedlots (animal storage areas for factory feeding of cattle prior to finishing).
These can have tens of thousands of animals present to reduce demand through increased supply at peak times.
In our meeting with the Directorate General Competition’s Philippe Chauve, ICOS cited the example of US legislation to outlaw meat processors from owning beef feedlots because of the distortion to free trade.
Additionally, did you know that no Irish-owned factory in Britain will kill Irish-born cattle? This has a simple effect.
It cuts off live trade and competition from Irish marts into Britain.
The factories argue the basis for their restrictions is consumer-driven (and driven by their multiple retailer customers).
However, there is no scientifically-based animal welfare or meat-quality rationale for the imposition of their movement restrictions.
The onerous conditions imposed by meat plants on the movement of livestock have no basis in terms of regulation or meat quality and no justification on animal welfare or veterinary grounds.
They are simply being used as a market control measure.
