Mr. Pat McCormack:

I thank the joint committee for giving me the opportunity to address it on such an important issue. I am joined by Mr. Des Morrison, chairperson of the livestock committee, and Mr. John Enright, general secretary. I acknowledge Ms Áine O'Connor, our policy officer who is in the Visitors Gallery, for her contribution to our submission. As members have had sight of it for a number of days, I do not propose to read it word for word. I will, however, comment on the critical issues. As I look around the table, I note that all of the public representatives present come from rural areas. It is the people they and I represent who are directly affected in terms of their income and potential income.

There are a number of pillars in rural Ireland which are driving the rural economy, the predominant one being agriculture. Within this pillar there are dairy, beef and tillage farms which, for some, may be a single driving force, depending on geographical location. The key issue in the beef sector is the lack of income from beef production. As highlighted by Mr. Healy and Mr. Woods, 100% of beef farmers' income comes from direct payments. If these farmers had no livestock, they might well be better off. That is a critical point to make. I acknowledge the below cost selling initiative which was introduced recently, in which Commissioner Hogan played an important role, but there are monopolies operating in the sector, something which leaves producers vulnerable.

The CAP provides us with a serious challenge. At the very least, we need to maintain the existing budget. Even in so doing, we are on a downward spiral because of inflation. I am speaking not about inflation for five or six years but for 25 or 26 years during which the CAP budget has been maintained. As in the last CAP round, convergence remains an issue. While there were some winners, there were also significant losers. The people the ICMSA represents are family farmers. Some of them lost heavily because they had small land areas, but they received significant payments per hectare. This issue needs to be addressed to prevent farm families in rural Ireland from losing in the next CAP round in terms of convergence, but it will not be an easy task. I understand it is a per hectare payment, but there must be a set figure under which no farmer will be subject to convergence.

Farm families live in fear of inspection. Our branch and county executive meetings are generally held in the autumn. During these meetings we hear many bad stories from people, usually from the second last row. For each one of them, there are 25 waiting to meet us after the meeting to tell us their stories.

I have been involved in the ICMSA for the past ten years as a national representative. The word "simplification" has also been around for the past ten years. Farming has become extremely complex, as has the CAP. We need to see simplification, as defined in the dictionary, delivered in such a way that life will be made easier for the people participating in the schemes.

As regards Pillar II, in the past we had great environmental schemes, including the rural environmental protection scheme, REPS. Unfortunately, environmental schemes are now about payments for income forgone or moneys invested, rather than providing support for a farmer or his or her farm.

The IFA mentioned the genuine farmer. All of us here failed miserably in the last round for the active farmer. If we are serious about maintaining a viable agriculture sector, this time we need to hit the nail on the head for the genuine farmer.

Cost is another significant issue. Costs are escalating. The argument could be made that the escalation in costs 12 months ago was weather related, but that is not entirely true. The price per tonne was increasing at the same time as use of product was increasing. Another cost that is escalating is the cost of veterinary medicines. I know from my discussions with farmers living near the Six Counties that if a hard border is reintroduced - I hope that will not be the case - they will cross into the Six Counties to buy animal medicines.

We need to look at every aspect of reducing costs, including the VAT on those products. Our standards have increased and must be maintained, but it cannot be denied that we are getting squeezed. I am from County Tipperary and it is not viable for me to travel a long way to cross the Border, but those who live right on it cross over because there is a significant difference in price.

Origin Green and Bord Bia have done great work in promoting our products, traditionally beef and, in recent times, to a lesser degree, dairy products. There is no point in saying Bord Bia has not done so. The industry approached the farming organisations ten or 11 years ago to state it needed an insurance scheme under which there would be a return from the marketplace and something in it for everybody, including farmers. Farmers are subject to quality assurance scheme inspections. This morning I saw an inspector going up my neighbour's road to inspect his whole farm and all of his animals. However, when he goes to have them slaughtered, the factories will only pay a premium or a dividend on some in-spec animals. All animals are quality assured, given the time, effort and care and animal remedy records that are involved in it. All animals from a quality assured farm need to qualify by meeting that specification.

We talk about transparency and confidence. We all need one another in the beef industry, but the reality is that the primary producer has no confidence in the rest of the chain. We are almost ten years on from the introduction of the quality pricing system, QPS, scheme. When it was first introduced, one of the Deputies on this committee was sitting on the other side of the fence. Nonetheless, the Irish Creamery Milk Suppliers Association, ICMSA, opposed it at the time. There are 225 hedges to hide behind. One could send 225 animals to the factory and obtain 225 different prices. It is not very transparent.

I want to compare the beef and the dairy industries. The Milk Market Observatory gives information on prices and volumes across Europe. The Meat Market Observatory gives information on volumes but none on prices. Our association sometimes condemns Ór Nua, but it is a collaboration of milk processors who are marketing product and they have an index to communicate what a basket of products is returning. When do we really, genuinely know what the basket is retuning to the beef processor? That is a serious issue when it comes to transparency and confidence in a significant sector of our business. Things are often hidden in the quoting of averages which tell a lot but mean nothing. A price range is needed for full transparency.

There was a lot of anxiety in January and February about Brexit and, believe it or not, there still is. There were 54,000 cattle killed in Department registered feedlots in January and February. What impact did it have on the overall kill figures? They represented a substantial 17%, but it had a massive impact on any hope of a price rise for the primary producer. Some committee members are very familiar with how factories and farmers work. Farmers often, or nearly always, send cattle through an agent to the factories. How many cattle did the factory agents arrange to have killed? Was the figure another 54,000 or was it 108,000? The answer is nobody knows. It is far from being free and transparent trade. There is a belief in rural Ireland that it significantly manipulates the price we receive and prevents the occasional rise in prices. The ICMSA fully supports beef producer groups, but there are three major players in the beef processing industry. With 54,000 or more cattle coming on stream from them, it is hard to break that monopoly.

My colleagues have mentioned that there is a significant difference in prices for steers and heifers compared to 12 months ago.

We must also remember cull cows which are an asset on any farm, whether suckler or dairy cows. Prices for them have gone backwards by about 60 cent per kg, or €200 a head, in the past 12 months.

We certainly welcome the beef index because it is an opportunity for farmers, dairy farmers in particular, when they have bred a significant number of dairy cows, to add value both for themselves and other elements of the chain in the years to come. We have seen the merits of the beef environmental efficiency pilot, BEEP, and beef data and genomics programmes in the recent period. They have provided benefits for suckler cow farmers, but they will ultimately not be sustainable if the farmer is not getting a decent price for his or her product.

We have passed the peak in 2019 for live exports, particularly calves from the dairy herd. We need to be ready for 2020 because the clock is ticking. We need lairage space in Cherbourg and elsewhere to move that stock. We need to establish a working body to represent exporters, the Department and farmers. We are the primary producers and there are veal units that want our stock, but there are people in between who make a margin. There is a responsibility on all of us to maximise what leaves the country to the betterment of what stays here.

We thought Brexit would be done and dusted by now. D-day could be 12 April or a later date. All of the uncertainty and the unknowns have led to a lack of farmer confidence and farmers hedging their bets. They are buying a few cattle and letting a bit of ground on a long-term lease or for meadowing. There is fear. Farmers lost their shirts in 2018 and do not have them to lose in 2019. Brexit is an important issue and there is a need for adequate funding to be put in place. Farmers are not only losing their money in March and April and possibly into May and June, but they have also been losing it for the past six, eight or 12 months because of the uncertainty surrounding Brexit. It has been used as leverage to pull prices in that period. Money needs to come back, in a meaningful way, to the primary producers and finishers along the chain.

The environment has not really been mentioned yet. It would be hypocritical of the Government to support the Mercosur deal at this time, given the potential losses and consequences in the UK market, but, as well as that, environmental issues present a global challenge and needs to be tackled as such. Ireland is the fifth most efficient country in Europe in beef production, something we need to protect. Ultimately, it all comes down to economics. We have an environmental sustainability programme in the form of the beef and lamb quality assurance scheme and various other sustainable programmes, but it will be to the detriment of the industry unless it is economically sustainable. It is up to all of us from rural Ireland to put our shoulders to the wheel in that regard.

My colleagues look forward to taking questions from committee members.