Mr. Michael Spellman:

I thank the Chairman and the committee for affording us the opportunity to come in and present to them today on this very important and urgent issue.
Ireland has more than 6.5 million cattle, producing 2.2 million calves annually. This results in almost 1.5 million cattle being presented for slaughter, of which we export almost 90%. Additionally, we have approximately 200,000 to 300,000 live exports. Ireland has been a provider of cattle for Northern Ireland and the United Kingdom for hundreds of years. As a nation we are only consuming approximately 10% of what we produce, and in 2013 Ireland produced over 472,000 tonnes of beef meat for export. The United Kingdom, on the other hand, is only approximately 75% self-sufficient in beef meat and must import approximately 350,000 tonnes of additional beef to satisfy national demand. Ireland supplies the vast majority of this imported beef meat, as one would expect, due to our proximity. In 2013 Ireland produced and exported more than 250,000 tonnes of beef meat to the UK, representing almost 70% of its total beef imports.
During the past number of years our meat processors have introduced what they call a quality bonus payment for cattle that fulfil certain criteria. This bonus payment now stands at 12 cents per kilogram, which represents an average bonus of €40 to €60 per animal. In effect, this is not a bonus payment but a penalty on all other animals produced by Irish farmers. An integral part of qualifying for this bonus payment is adherence to Bord Bia's quality assurance scheme, QAS, which has many criteria for full eligibility. Regarding the trade and movement of animals, the QAS states that animals must reside in a quality-assured farm for 70 days or more to qualify. The scheme allows for animals to be traded freely between quality-assured farms and if the cumulative number of days an animal resides on such farms amounts to 70, then the animal retains its quality assurance status.
The meat plants, however, have effectively usurped the Bord Bia scheme and will only pay their bonus if an animal has resided 70 days or longer in the last herd, goes directly to slaughter from that farm to a meat plant, and has four movements or fewer in its lifetime. The effect of these additional conditions by the meat plants is twofold: it excludes the possibility of these animals being traded within the last 70 days before slaughter, and it effectively prevents factory-fit animals from being traded in livestock marts. The rationale for the introduction of these additional conditions by the meat plants is simple and clear: it is being done to subvert fair competition for livestock and ultimately to control prices.
These bonus payments, we are informed by the meat industry, are due to a customer requirement led by the large British multiples arising from animal welfare concerns. As I outlined, one of the main criteria for farmers to receive this bonus is having four movements or fewer in the animal’s lifetime. Due to the structure of the Irish beef sector, smaller farms in the west traditionally supply other farmers in the midlands and east of Ireland, and Northern Ireland farmers, with younger store animals. To facilitate this, these animals require several movements on various farms before these cattle are finally finished on the last farm before slaughter.
ICOS believes that this measure, along with the other measures introduced by the meat industry, is a form of market manipulation that ensures that transparent price competition is stifled as much as possible. The meat industry and the UK multiples are fully aware that due to their manipulation of the market in the manner described, farmers are not getting a fair and true market value for their stock. The UK market is the only European market where these effective barriers to free trade in livestock exist. Ireland is exporting 200,000 tonnes of identical beef meat to continental Europe without the restrictive stipulations that have been introduced for exports to the UK, allegedly for quality and welfare reasons.
ICOS contends that the further interference with the trade that is now evident, with the effective ban by meat plants in Northern Ireland on killing cattle from the Republic, is anti-competitive and in contravention of free trade principles within the EU. The graph in the presentation clearly illustrates the effect of this market manipulation and its distortion of Irish beef prices. It shows that in the week ending on 8 February of this year the Irish price was a full 60 cent per kilogram less than what was obtained for the same beef in the UK.
ICOS has a first-hand account of this from farmers in Northern Ireland. We are aware of cases of Northern Ireland farmers with large numbers of Southern-born cattle that are fit to slaughter who cannot get them killed in the Northern meat plants. One such farmer has told the ICOS that he is facing financial ruin as he has more than 2,000 Southern-born cattle in his feedlot. For the past 30 years this farmer has purchased his cattle from marts all across the west of Ireland and has always got them killed in Northern meat plants. He has now effectively been told that he cannot get these animals slaughtered in Northern meat plants unless he takes a £150 discount, as they were born in the South. This farmer cannot now export these animals back to the Southern meat plants as his herd has a movement restriction placed upon it due to TB regulations; in other words, it is a closed-slaughter-only herd. This policy, if retained, will leave this farmer and many others facing financial ruin.
Typically, these Northern farmers purchased their cattle from the livestock marts in Balla, Ballymote, Mohill, Roscommon, Elphin, Castlerea, Ballinasloe, Athenry, Ballyjamesduff, Ennis, Birr, Nenagh and Roscrea, representing a significant amount of trade for these marts and, more importantly, for local farmers in these areas. Apart from the obvious benefits of having an additional buyer around the ringside, the "Northern buyer" effect lifts the entire livestock trade on the days these buyers are present, as competition for stock heats up.

This benefits everyone in the livestock industry and ensures a fair and open price. A founding principle of the European Union was to ensure free trade between member states by removing barriers to trade. The Ireland-UK beef trade is now seeing the effective reintroduction of national barriers to trade. Inaction in this area by the EU and our Government is resulting in large retailers and Irish owned meat factories exercising undue control over the price of beef.

ICOS has raised the issue of barriers to free trade in live cattle on numerous occasions at national and EU level, only to be informed that the EU regulations on meat labelling were to blame. This assertion is not accurate, however, because retailers find it easy to label beef meat to comply with the regulations when it suits them. ICOS has been informed that the retailers themselves have conducted market research into the purchasing habits of consumers in the United Kingdom and found no adverse purchasing habits when the label clearly illustrated country of birth, finishing and slaughter of animals. The BSE crisis of the mid-1990s was the impetus for the introduction of Regulation 1760(2000), which required compulsory beef labelling to be put in place before 1 January 2002. There is now an urgent need on the part of the Government and the EU to review all of the terms and conditions of trade relating to both beef exports and live exports of livestock to the UK, with a view to ensuring greater transparency and freer competition. Irish farmers are entitled to get the full value of their stock and they should not be exploited by questionable market restrictions introduced by meat factories with the support of the large retailers.

On a recent visit to England, ICOS gathered evidence of Irish beef and British beef being sold at the same price per kilogram in Tesco stores. We photographed two identical cuts of brisket beef, one labelled Irish and the other British, on sale for the same price at £8.00 per kilogram. However, the Irish farmer would have received between 15% and 20% less per kilogram for his or her beef. This equates to a difference of almost €200 per head. Where did the extra margin go if the UK housewife was not getting any discount for Irish beef over and above British beef? In Britain, over 45% of beef is sold through smaller abattoirs and food service outlets which supply restaurants, etc. These retailers are solely concerned with price and quality. One would expect them to be an outlet for Irish-born and British-finished cattle. Unfortunately, that is not the case because these smaller food service abattoirs, while independent, rely on some of the bigger Irish-owned meat renderers to purchase their offal. Some small abattoir owners have indicated to ICOS that these same Irish-owned renderers were mysteriously unable to collect offal if they killed quantities of Irish-born cattle but had no capacity problems when they were not killing Irish-born cattle. We met a number of large UK farmers to discuss potential purchases of Irish cattle in their feedlots. These were farmers who traditionally have purchased and fattened Irish-sourced stock. They indicated to ICOS that no Irish-owned factory in England would kill Irish-born cattle. These farmers had in the past bought thousands of Irish cattle and fattened them in feedlots but now they have encountered so much difficulty in getting them killed that they have effectively been forced to cease trading in cattle from Ireland.

ICOS urges the committee to lend its immediate support to addressing the anomalies that have been highlighted in this presentation and ensuring that the necessary measures are taken urgently to rectify this calamitous situation for farmers.