Oireachtas Joint and Select Committees

Tuesday, 9 April 2019

Joint Oireachtas Committee on Agriculture, Food and the Marine

Future of the Beef Sector in the Context of Food Wise 2025: Discussion (Resumed)

Mr. Angus Woods:

What I observe quite often in many different forums is that people ask if it is the increase in the dairy herd that is causing the problem in the beef sector and why the farm organisations do not work together and so forth. Generally, the perspective is that if people pull themselves together it will be grand. The reality is that every farm organisation here has a right to represent its members. It is no different from every political party representing different sectors, and they all have a political right to represent their members. It is great if it works out that they all correspond on a particular issue, but there are always going to be objective differences in opinions. Moving from there it becomes a discussion on what a farmer's impact is on the other farmer. It is almost a divide mentality being pushed down at farmer level. One gets it from the processors as well - divide them, do not let them talk to each other, give them special deals on their own cattle and tell them not to talk to anyone. Divide and conquer is often being pushed.

What I would like from this engagement today and the project in which the committee is engaged is that we have a proper examination of the structure of the beef sector. It is very easy to get sucked down into the smaller detail, and Senator Conway-Walsh spoke earlier about the medium-term issues such as grade, quality assurance and the like. It is very easy to get sucked down in that regard but I would have expected a committee of this stature to look at the overall, bigger picture issues. We have been talking about a lack of competition in the beef sector for over 20 years now. Show me a committee that has been brave enough to step up and say it is going to investigate this. We put together a report two years ago but no committee came forward and said it was going to look at what is happening.

This is a crisis situation at farm level. This is where we should be talking about big ticket items. Brexit is having a monstrous effect at farm level. My two colleagues have highlighted exactly how much impact it has had just since 1 September. Bear in mind that on the morning after the vote we saw 10 cent per kilo wiped off straight away. Brexit is a big political interference in what was a normal functioning marketplace. It is unreasonable to expect farmers either to be able to plan for it or to be able to carry the cost of it given such a level of interference in what was a well functioning marketplace. That is a big item which must be dealt with. Mr. Healy and Mr. Kinsella have outlined our retrospective look at that and what is required to address that scenario. I would expect the committee to support that because it is political interference.

On other key issues, it comes down to the base price. What is impacting on the base price? There are questions asked about markets, new markets and whether we were too much involved in the UK. The reality is that industry will always go to the highest paying market at the time. Consider many of the big announcements about markets such as China and the US, and how that will transform us overnight and make a significant difference. The best paying markets are the European and the UK markets. There must be strong recognition that anything that damages those markets will have a significant impact at farm level.

There is the Mercosur trade deal. Even with current imports into the European Union the vast majority of beef imports from the Mercosur countries are coming in by paying the full tariff that is already in place. They are priced at such a low level they can afford to pay the tariff and still come in and undercut us.

We have to look at the overall European market. We are asking our farmers to produce a product to a European standard yet it is going to take in other product which is not produced at that standard. Those countries have significant competitive advantages. If we ignore the European and UK markets and look at the Chinese or US market, we will be competing for shelf space with product that is, perhaps, hormone treated from massive feedlots. It is completely different product from what we can produce and completely different from what Irish and European consumers would want us to produce. The European market is key in terms of where we go.

On the transparency aspect, our two main sectors are probably our beef and dairy sectors. We see the level of transparency in the dairy sector and the complete absence of transparency in the beef sector at present. I believe the initiative displayed by Glanbia and Kepak is forward thinking. It is interesting that it took a dairy co-operative to stick its toe into the beef sector before an initiative such as this could come forward. Since Brexit was announced we have been asking for the key issue of contracts for de-risking at farm level to be included in forums such as the beef forum. We were told it could not be done but, lo and behold, suddenly a dairy co-operative is able to do it in the beef market.

There has to be political will to look at the bigger picture in terms of where the structures are. It has been wholly irresponsible on the part of the Government to allow farmers to carry the full risk on Brexit, even though we have known for over two years about the risk that was coming in the UK market. There should have been proper, adequate contracts available for beef farmers and there should have been an element of risk sharing across the marketplace, be it the processors, consumers or purchasers. It cannot all be borne by the farmers. That is unsustainable in the long run. We cannot operate in a scenario where we are calving cows today and we have no idea what we will get for our product two years hence. We keep our fingers crossed and hope that everybody else does their job and perhaps returns us a margin when they have all had enough drink out of the cup. That must be examined.

While the European meat market was discussed earlier, I believe we must start at home. It is possible for us to do much of this work at home. We cannot just say: "Let Europe deal with it and put together a model of transparency and when it gets that done we will join in". Even at present there are clear data in Europe relating to the Irish steer price versus the UK and Northern Ireland steer price. Europe is already saying that Brexit has had a significant impact on the Irish steer market. However, we must deal with those issues at home. We must set up an Irish market observatory where we can analyse the data and put forward something like a beef price index, somewhat similar to what is available in the dairy sector. That can be done at home. We cannot continue to try to fob it off and say that Europe has to do this or somebody else needs to do that. We must talk about big ticket items when we are examining the structure of the beef industry.

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