IFA: Farmers getting less for beef but cost up in shops

The Irish Farmers’ Association has claimed a growing divergence between the incomes of beef farmers and the prices consumers are paying is evidence "of the collusion between processors and retailers to cream off excessive margins for themselves".

The IFA said it had compiled figures which showed meat factories “have no justification” for continuing to withhold higher market returns to beef farmers.

It said for the 12 weeks to the middle of September, the volume of beef sales in Britain was up 4.1% and price went up 3.3%.

IFA president Eddie Downey said the figures illustrated starkly that the main market in Britain performed strongly. He said that performance coincided with a 30c/kg increase in British cattle prices and also the widening of the gap in the amount paid to farmers in the two jurisdictions to €350 per carcass.

“Given the large scale of exports to the British market from here, the processors cannot justify their refusal to pass back increased market prices to Irish farmers.”

He was speaking at the ABP plant in Cahir, Co Tipperary, one of 14 factories affected by the 48-hour nationwide protest by farmers.

He said the figures raised serious questions about the margins that operated in the food supply chain outside the farm gate.

“The price we are getting has been cut, yet consumers in our main market are paying more. Clearly, this situation is being exploited by processors and retailers at the expense of consumers and primary producers.”

He said a key element of addressing the beef price question must be full transparency and independent verification of wholesale and retail prices so that is it clear to everyone who gets what in the food chain.

The IFA said an examination of Irish retail beef prices in the 12 months to August 2014 shows there is no link between the fall in farm gate prices and the price consumers pay.

“CSO data reveals that there was a small drop in steak prices of 2%, while other beef products, including diced beef (+6%) and roast beef (+1%) increased in price,” it said. “Teagasc has confirmed that livestock farm incomes are down 13% to 22% last year, ranging from €9,469 to €15,595.”

Mr Downey claimed the growing divergence between the incomes of beef farmers on the one hand, and the prices consumers are paying on the other, was evidence of the collusion between processors and retailers to “cream off” excessive margins for themselves.

However, Joe Ryan of Meat Industry Ireland has dismissed IFA claims that the British steer price has increased by the equivalent of 30c in the last five weeks. He said official figures show the average price is at similar levels to those of five weeks ago and have fallen in recent weeks. He also said EU Commission figures show the Irish cattle price is 101% of the EU average.

No easy resolution in sight as both sides deeply entrenched

Q. Why did the country’s beef production ground to a halt for 48 hours at one of the industry’s busiest periods of the year?

A. Beef farmers are unhappy with the amount meat processors are paying for their animals. They say 60% of their product is exported to Britain yet farmers there are reportedly receiving up to €350 more per animal.

Q. What is the justification for a price differential for, what remains after all, roughly the same animal?

A. The IFA accepts there is a justification for a differential between the two — British consumers want to eat homegrown meat so there is greater demand for the animals reared there. However, it says a differential that used to be €150 has more than doubled.

The IFA says meat producers in Britain have seen a 30c per kg increase in the price they receive while the producers here have received nothing like that.

There is also the question of how the Irish beef is used in Britain. Meat Industry Ireland (MII) has said only 4% of what it sells in the retail market in the Britain is steak-cuts, some of the most valuable parts of the animal which accounts for 30% of the value of the beef. However, the IFA says the cows produced in both jurisdictions are the same so the price should not be so disparate.

Q. Has the price received in Britain increased significantly more than here?

A. It depends which side you ask. IFA is insistent that its claims of a 30c increase for producers across the water is accurate. It says there is no excuse for factories here to withhold a price increase to farmers when Irish beef sales to Britain are up 20% this year.

MII says claims of a 30c increase are “misleading and unhelpful”. It says figures from EBLEX, the organisation for beef and lamb levy payers in England, show the average British steer price is at similar levels to those five weeks ago. It also says IFA is consistently focusing on one type of animal (a Brit-ish steer) and such a focus “completely ignores the full basket of animals Ireland produces and the range of meat cuts we sell across all our European markets”.

MII also says EU Commission figures show the Irish cattle price is 101% of the EU average, a strong performance given we export 90% of our produce into those markets where the consumer preference is for local produce.

There is documentary evidence to support the IFA’s case that the price for its members’ animals is low. Recent figures from the Livestock and Meat Commission in the North showed that the differential between North and South was €277 per animal and that prices on the British mainland were €27 per animal higher.

Q. How to resolve this?

A. The first thing to point out is there has been some agreement between the sides on specification — deciding what category the animal falls into in terms of age, etc, and how that is reflected in terms of the price paid by the factory to the farmer. However, the two sides appear as far apart as ever on the basic price being paid. There is another forum between the sides due to take place tomorrow and farmers are insisting some move towards a closing of the gap between the British and Irish price has to be forthcoming. If a resolution is not found, further unrest may result.

The first farmer blockade of meat factories at the end of last month cost the industry in the region of €10m. It also caused severe reputational damage.


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