Oireachtas Joint and Select Committees

Tuesday, 14 May 2019

Joint Oireachtas Committee on Agriculture, Food and the Marine

Future of the Beef Sector: Discussion (Resumed)

Photo of Martin KennyMartin Kenny (Sligo-Leitrim, Sinn Fein) | Oireachtas source

We have been discussing the beef sector for the past couple of months. It is clearly in a lot of trouble and has a lot of problems. Anything that has the appearance of a solution or way forward or that could assist the sector will naturally be welcomed. The type of closed loop system that is proposed is one I know quite well. I used to work in the mushroom industry years ago. I had mushroom tunnels and it was very much a closed loop system. We bought the compost, all the materials, packaging, chemicals and everything from a company and then sold the mushrooms back to the same company, which took the cost of everything out of the final price. We were very much at the mercy of the company. There were good times but there were bad times as well. If we got a bad load of compost, for instance, that produced very low yields, we had great difficulty trying to argue our case. That is one of the problems with the proposal being put forward here. Farmers will look at the prices and may think they are getting a bit of a bonus here, along with the possibility of getting money up front. It is up to €770 or up to 75% of the cattle early on, so the farmer can have a cashflow scenario sorted out. While that looks attractive, many farmers would be very worried about not having the freedom to buy their input from wherever they want or to sell to whoever they want, and that they would be tied in so restrictively. That needs to be dealt with.

The system can work but I do not think it will work in the long term. I do not think it is the solution to the problems we have in the beef industry at present. It may be part of the solution and may work for some farmers who are tied in to an extent. It might possibly work for dairy farmers who are also producing beef or are both customers of and suppliers to the two groups that are here. Other farmers would have serious doubts as to the way forward. The witnesses have a lot of work to do to convince people that this system can work and that it is the solution that was hailed. I know nobody would present it as being the ultimate solution and the witnesses are not doing so. Nothing is the ultimate solution for the beef crisis, unfortunately. Even the prices the witnesses are talking about, with the bonuses added in, go nowhere near making most beef production into a profitable and prosperous industry. Even prices of €4.28 to €4.43 per kilo will not cut it in the long term when we look at the amount of investment that has to go in.

The questions that need to be answered are around that. We need to know how the farmer can be sure he is going to get the proper return and is not going to be over a barrel when it comes to it. The witnesses gave some estimated figures, for example, if there are 6,000 animals in year one, the figure would go up to more than 50,000 animals by years four to five. I would like to see how that is going to work. It will have to be shown to work very well in year one before anyone is going to stay there.

As was pointed out by my colleague, there is also the issue of all the other suppliers that have very good relationships with and work well for farmers. They are in business as well. Farming in the rural community has a kind of micro-economy of its own, in that the farmer, the miller, the veterinary services and everyone around them all depend on each other and work together. When two big companies - scale is important in any business - set up what is in effect a closed system and a closed model, many people in the community would see it as pushing everyone else out.

There is also mention of the inputs and a suggestion that the inputs would all come from within the group. I see that nutritional inputs are included in that. I see reference to a reduction in the carbon footprint by introducing feed additives that would produce less methane. Would the witnesses also be talking about medicines for cattle? Is that part of it? I would like to get details in respect of all of that.

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