Time is needed for agreement on reform of the beef sector
An uneasy peace deal has allowed the beef and sheepmeat industries to resume, but it will be quite a challenge to keep hostilities from breaking out again.
And there is also the danger of a no-deal Brexit nuclear option making the factory gate skirmish irrelevant.
In the meantime, there is a huge backlog supply of beef cattle (over 100,000, according to processors) to process, and to store or export.
Exporting it looks challenging, because July statistics indicate there has been a year-on-year reduction of 16% in Irish exports to the UK, which takes 52% of the beef produced in Ireland. That’s a big jump from earlier statistics indicating only a 4% fall in Irish beef export volumes to the UK for the first six months of 2019, albeit with prices also down, by 6% year-on-year.
However, Ireland’s total six-month 2019 beef export volume is believed to have increased by 14%, a welcome move away from over-reliance on the UK market, if the statistics are reliable.
Improved non-UK exports may be linked to the 27% rise in beef import volumes (46% in value terms) to the massive China market, to replace the one-third of their pork production they may have lost to African swine fever.
With Argentina now sending 71% of its beef and sheepmeat exports to China, and Brazil and Uruguay also sending huge amounts, gaps in international markets, including China itself, will hopefully appear for Irish beef exports.
Market analysts believe beef demand from China will remain strong for the next three years. That can help beef processors re-connect with many customers that processors say did without Irish beef during the factory protests, and committed to alternative suppliers, for at least a few weeks.
If processors can get back that business, achieving the transformation promised by the agreement between processors, farmers, and the government, is the next challenge, for all in the industry.
For farmers, that challenge is “sweetened” by an estimated €25 million extra per year in bonuses, for which 70% of all animals processed can qualify.
Hopefully, farmers will give the agreement a chance, even though many of its big promises would take some time to materialise.
For example, a beef market task force will take some time to set up, and to examine alleged anti-competitive practices, and bring about transparency in the industry.
The task force, which will have representatives from all parts of the industry, will also consider the appointment of a regulator for the sector.
It will also take time for the Teagasc State agency to carry out a review of the beef cattle price grid with a view to seeing how it might be changed in the future.
But cattle farmers do not have to sit around and wait for these promised developments to take shape.
The advent of producer organisations gives them a ready route towards better prices for their cattle.
The Beef Plan Movement’s new producer organisation (PO), Irish Beef Producers, has been recognised by the Department of Agriculture, Food and the Marine.
Government ministers have spelled out how POs could change the industry.
Agriculture Minister Michael Creed said when people control significant numbers of cattle through a PO, they have leverage, they can negotiate price and specification, and they can share risk, and plan with greater certainty.
His predecessor as Agriculture Minister, Simon Coveney, said there is not much point in beef farmers all being individual price-takers selling animals, one by one. “Farmers have the power in their hands if they organise in a way that creates a collective strength.”
He said one cannot have one PO, that would be anti-competitive, but one can certainly have five or six, where there are large numbers of farmers with a professional management team managing the sale of their produce, negotiating directly with factories around conditions and price.
He said empowering farmers to negotiate with a lot more power and weight is a necessary part of restructuring the beef sector in a farmer-friendly way.
