Andrew Doyle (Wicklow, Fine Gael)
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I remind members, delegates and those in the Visitors Gallery that all mobile phones must be switched off for the duration of the meeting as they interfere with the broadcasting of proceedings.
The purpose of today's meeting is to discuss the crisis affecting bull beef producers. I welcome from the IFA Mr. Eddie Downey, president; Mr. Henry Burns, livestock chairman; Mr. Pat Smith, general secretary; and Mr. Kevin Kinsella, director of livestock. Attending on behalf of the Irish Cattle and Sheep Farmers Association, ICSA, are Mr. Patrick Kent, president; Mr. Eddie Punch, general secretary; and Mr. Edmond Phelan, beef chairman. The representatives of the Irish Creamery Milk Suppliers Association, ICMSA, are Mr. John Comer, president; Mr. Michael Guinan, chairman of the beef and cattle committee; and Mr. John Enright, general secretary. Representing the Irish Co-operative Organisation Society, ICOS, are Mr. Michael Spellman, chairman, and Mr. Ray Doyle, secretary. This is the first appearance of Mr. Downey and Mr. Kent since their election as presidents. I congratulate both gentlemen and wish them the best of luck during their terms in office. We look forward to working with them. This is the first time both will address the committee in their respective roles. Representatives of the meat industry will attend later. I invite the delegates to make their presentations in the following order: the IFA, the ICSA, the ICMSA and the ICOS.
By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. If they are directed by it to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a person or an entity by name or in such a way as to make him, her or it identifiable.
Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.
I invite Mr. Downey to make his opening statement.

Mr. Eddie Downey:

In the coming years I look forward to working with the Chairman and members of the joint committee. It was good to see so many of the members outside when we held a protest earlier. There were 3,000 farmers on the streets, which demonstrates the real extent of anger and frustration among them about what is happening in the beef sector and what has happened since the beginning of the year.

Beef price cuts and specification changes at factory level are seriously eroding confidence in the sector and threatening to derail the Government’s Food Harvest 2020 plan for the €2 billion beef and livestock sector. At farm level, the price cuts and specification changes will hit all livestock producers over time. Winter finishers, particularly bull beef finishers, are in the eye of the storm. Some bull beef finishers are at their wit’s end and unable to have cattle killed. When cattle are killed, farmers are facing price cuts of over 50 cent per kilogram, which can amount to between €200 and €300 per head. Some producers are facing very real and substantial financial losses this spring.

I would like to go through some of the details of what has happened in the beef sector and how circumstances have changed in the past year. First, cattle prices are well down, at levels at which winter finishers cannot make a margin. Based on official Bord Bia data, compared to this time last year steer prices are down 21 cent per kilogram, or €77 per head. Heifer prices are down 26 cent per kilogram, or €80 per head. Bull beef and cow prices have taken much larger hits. Cow prices are back 56 cent per kilogram, or €174 per head. Bull beef prices have decreased by an average of 55 cent per kilogram, or €204 per head.

Let me put the magnitude of these price cuts in perspective. If they were to be maintained for a full year, the losses to the beef sector would be in the order of €172 million per annum. In addition to the price cuts, the factories have moved very substantially on specification changes without giving producers adequate notice or time to make adjustments to their stock.

On bulls, the factories have introduced age and weight limits. Bulls over 16 months of age or over 400 kg, or both, are now hit with price penalties. Most of the factories have stated they do not really want bulls. They would prefer to take steers or heifers, considering that the kill moved from just over 100,000 head in 2007-08 to over 200,000 in 2012. It was the factories that developed this trade with the producers. In 2011 factories strongly encouraged farmers not to export their dairy calves and to keep them for bull beef. Farmers responded and now they cannot have their bulls killed, let alone get a viable price.

Farmers have been let down and believe the factories have reneged on their commitments. Farmers increased their production of bull beef as part of the Food Harvest 2020 plan and in conjunction with the State advisory service, Teagasc. Bull beef production was promoted based on efficiency and performance. The Derrypatrick suckler herd in Grange, County Meath was developed using an 18 month old bull beef system, with the meat factories involved. A key element of the Food Harvest 2020 plan was to increase the beef kill from 30,000 per week to 40,000. The kill is 31,000 to 32,000 per week and factories are telling farmers they are not able to kill their cattle and are pushing stock intake back several weeks. In many cases, because of these delays, farmers are getting caught by age and weight limits and incurring very severe financial penalties of another 20 cent to 50 cent per kilogram.

The most recent move by the factories to target prime in-spec steers and heifers with new price and weight cuts, following their meeting with the Minister, Deputy Simon Coveney, was a step too far and shows disregard for both the Minister and farmer suppliers. The steer and heifer price was reasonably stable since Christmas, at €4 per kilogram for steers and €4.10 per kilogram for heifers. Prices have now been cut to €3.95 per kilogram for steers and €4 per kilogram for heifers. In addition, some factories have introduced a weight penalty of 20 cent per kilogram on any animal over 400 kg. Others are using dual base prices using the quality payment system for stock over 30 months. None of these conditions was part of the quality payment system. Winter finishers simply cannot endure such losses. The time has come for the Minister to stand up for farmers and reject the factories’ tactics. He must insist on stability and confidence being restored in the beef sector.

The reality is that there is good market demand for in-spec steers and heifers. There is no excuse for factories not maintaining the base prices of €4 per kilogram for steers and €4.10 per kilogram for heifers. In our main export market for steers and heifers in the United Kingdom, Bord Bia reports the R grade steer price is the equivalent of €4.69 per kg and that the R grade heifer price is at €4.66 per kg. For the average steer, UK prices are €250 per head over Irish prices. For heifers, the gap is €163 per head. The gap between prices in Ireland and those in our main export market where half of all our beef is sold is way too large and must be narrowed. At these price levels, in our largest export market it is very difficult for farmers to understand why prices have come back so much in Ireland.

In our main European markets cattle prices are reasonably stable. In Italy R grade male animals are making the equivalent of €4.24 per kilogram, including VAT, which is down 1.5% on last year. In France R grade male animals are making €4.12 per kilogram, including VAT, which is the same price as last year. In Germany R grade male animals are making €4.02 per kilogram, including VAT, which is down just 7% on last year. In Spain R grade bulls are making €4.10 per kilogram, including VAT, which represents the same level as last year. In general, cattle prices across the main European markets are stable, at slightly over €4 per kilogram.

Since problems first began to emerge with beef prices last December, the IFA moved and met representatives of the meat plants at local level in early January, outlining the losses at farm level, demanding price stability and a move on the backlog of bulls. In late January, after our AGM, the IFA met Meat Industry Ireland and senior factory management to demand a halt in the price cuts and an increase in the kill to shift any backlog of bulls. Following that meeting, the bull kill increased slightly, but the continuing price drops and specification changes were totally unacceptable. In mid-February 1,500 farmers protested on the cattle price issue outside a number of the main processing plants in counties Meath, Waterford and Tipperary. The IFA subsequently called on the Minister to call in representatives of the factories and challenge them on their commitment to pay a viable cattle price to farmers.

The IFA met the Minister, Deputy Coveney, and made it clear that if cattle prices are not stabilised, the current crisis has the potential to totally derail the Food Harvest 2020 plan for the €2 billion beef and livestock sector. We also made it clear that it is not acceptable to farmers that the Minister would consider he had little or no role with regard to factories on cattle prices, as he had outlined in the Dáil.
The Minister met the representatives of the factories on Thursday, 20 February. On Monday, 24 February, the factories reduced the price for steers, heifers, bulls and cows again. This is clear from the official Department of Agriculture, Food and the Marine price reports printed in last week's Irish Farmers’ Journal. These figures show that the price of all four categories of stock came back by between 1 cent and 7 cent per kilo on the week.
IFA is demanding that the Minister take immediate action to restore some confidence in the beef trade at farm level. The Minister needs to challenge the factories head-on, on the price and specification issues. He must stand up for farmers and make it crystal clear to the factories that the price cuts must stop. The factories need to send a positive signal that beef prices have bottomed out and will not fall further. In addition, the factories have to send a clear signal to their suppliers that the price of in-spec steers and heifers will not come under further attack and will improve over the spring period.
The factories and their supermarket clients cannot change the goalposts with new specifications in the middle of the production season. At this point, farmers calving cows or buying cattle this spring are at a loss as to the direction they should take. There needs to be real debate and analysis on the specification and the direction in which we want to take our grass-based beef production in Ireland.
The Minister must bring Teagasc, An Bord Bia, the ICBF, the factories and, most importantly, the farmers around the table on this issue. Under-16-month bull beef production does not work in a grass-based system. Tight carcass weights will leave our already under-pressure suckler cow sector uneconomical. The Minister must also tackle the lack of competition in the beef sector and take action to close the large price gap between Irish beef prices and those of our main export market in Great Britain.
We have worked hard to secure a new ferry route for live cattle to the United Kingdom. We now need the Minister to remove the artificial blocks preventing the expansion of the live trade to the United Kingdom, including addressing the labelling difficulties. This is a market access issue which is preventing the proper operation of the EU Single Market.
It has also hit the important store trade with Northern Ireland, affecting the mart trade and suckler farmers all across the west and the midlands. The Minister and Bord Bia need go to the United Kingdom and meet the supermarket bosses and their Government and agency counterparts to resolve these difficulties. Doing nothing is no longer acceptable. The large price gap between Irish and United Kingdom cattle prices must be closed. It is not acceptable that Irish cattle are being blocked out of part of the EU Single Market. The Minister must also become an advocate for the live export trade to European and other markets. By doing so, he will improve price competition and increase market outlets. Farmers believe a strong live export trade for Friesian calves to Spain and Holland, weanlings to continental EU markets and stores to North Africa are essential to keep a competitive balance in the trade.
Farmers are concerned that factories are being allowed use the Department of Agriculture, Food and the Marine animal identification and movement, AIM, system database to monitor livestock numbers for individual farmers. The IFA wants a guarantee from the Minister that the AIM system is absolutely confidential and that factories do not have access to the herd profiles of individual farmers.
Action from the Minister to restore confidence in the beef sector is urgent and essential. If the problems in the beef market are not addressed and prices are not stabilised quickly, the sector faces wider implications, particularly regarding the targets set down in Food Harvest 2020, including exports and jobs. As previously outlined, the price cuts alone will cost €172 million over a full year. The suckler herd is under severe pressure and the price cuts and specification limits will ultimately hit weanling and store prices, and compound this situation. The Minister made a positive investment of €52 million per annum with the new €80-per-cow beef genomics scheme for sucklers. We cannot allow the benefits of this investment to be totally undermined by price cuts and specification changes. Our suckler herd must be maintained and the factories must invest in this also. The fallout from the current difficulties has left winter finishers in a difficult position financially. Winter finishing and year-round beef production is essential to service the higher-priced retail contracts.
The recent market developments have left farmers sceptical about the industry's expansion plans for beef. The minute the beef kill goes over 30,000 head per week, the price seems to collapse. Any further expansion in the sector must be fully planned.
Factories have to be prepared to provide viable price contracts if there is to be growth in the sector. Otherwise, farmers must be strongly encouraged to export any additional dairy calves live in order to avoid damage to the beef price, as is happening this spring.
We are also demanding that the Minister take action on a number of other important issues affecting the beef sector in the future. The Minister and the Government must strongly defend the beef sector in the current trade negotiations of Transatlantic Trade and Investment Partnership, TTIP, and Mercosur, with the US and Brazil, respectively. He cannot allow beef into our markets from production systems that do not meet European standards. He and the Government must also introduce retail regulation to restore some balance and fairness in the food chain.
The IFA acknowledges the work of the Minister, Deputy Coveney, on opening new markets all around the world. He has driven our Origin Green sustainability programme with Bord Bia. However, the benefits of this work cannot be enjoyed only by a small number of processors and retailers. The development of the sector requires that the benefits of expansion to be shared throughout the entire sector. This must start with a viable cattle price being delivered for farmers.
Over the past while, we have seen the effect of this. The committee should at least listen to farmers this morning on the stress associated with it. It is shocking to see their incomes being decimated and the pressure that they are under. Mr. Henry Burns, our livestock chairman, who is present, has seen at first hand the effect of that and might comment on it.

Andrew Doyle (Wicklow, Fine Gael)
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I will take the opening statements and then let Mr. Burns comment, if that is agreed. I thank Mr. Downey. I now call on Mr. Patrick Kent, president of ICSA.

Mr. Patrick Kent:

I thank the committee for the opportunity to contribute to the debate on the crisis facing the beef sector at present.

We must begin by emphasising just how serious this is and what the knock-on implications are for the suckler sector. It is disappointing enough to see the steer price back 13% compared to its peak of last summer. It is a big problem for winter finishers to see the price weakening over the costly winter months.

However, the real disaster relates to the young bull beef price. Young U3 bulls are on average back 21% in price since last summer. However, the average U-grade bull price neither even begins to tell the story of how the goalposts have been moved in terms of specification nor tells the story of the immense pressure being put on winter finishers, who are being treated with contempt and who cannot get cattle killed when they need to. Overnight, the bull over 16 months is apparently no longer wanted. Maximum carcass weight has been reduced, in some cases to as low as 380 kg. Bulls a day over 24 months are worth considerably less than old cows.

The impact on the suckler trade is potentially devastating. Suckler farmers producing top-of-the-range continental bull weanlings cannot continue unless there are viable markets for this type of stock. Live exports are vital but on their own, they are not enough. How can we expect Irish finishers to have confidence to bid for €1,000 euro weanlings when specifications are being changed at the drop of a hat? How can a finisher take advantage of grass to grow the bull a bit at low cost, and then get these cattle killed at 16 months and at a maximum of 380 kg, and make a profit, especially as the Irish U-grade bull beef price in February was a full 25% behind the equivalent Italian price?

It is important to emphasise that it is the top-quality suckler producer who is most affected by this. These are the farmers who have invested heavily in breeding growthy, lean continental cattle. These are the suckler farmers who face the challenges of more hard calvings and higher costs. These are the farmers who are barely breaking even at best.

I anticipate that the publication by Teagasc of the results from all profit monitors completed under beef technology adoption programme, BTAP, will be a real wake-up call. Already we know from our members' anecdotes just how poor suckler returns are when they have completed the profit monitor.

It is now clear that the Food Harvest 2020 targets for beef are complete pie in the sky. While it is positive that the Minister has been energetic in developing new international export markets, the reality is that farmers are seeing no benefit from this at present. Farmers feel frustrated that there seems to be no great appreciation of the bull beef crisis. They are paying significant levies on cattle that are slaughtered and are asking how this can be afforded in a sector that is showing losses.

The Irish Cattle and Sheep Farmers Association, ICSA, has come here today to impress on members that this is a real crisis for the industry we represent. There is a strong feeling that the Minister is not taking it seriously enough. We can hide for the time being behind the overall agrifood exports figures for 2013 but the reality is that 2013 will not be repeated in the beef sector. The ICSA wants action on the beef crisis and I will now hand over to the ICSA beef chairman, Mr. Edmond Phelan.

Mr. Edmond Phelan:

As beef chairman I do not think I can ever recall a time when there was so much pessimism regarding the beef sector. Farmers are sick of the uncertainty, particularly relating to feeding cattle over the winter. While it is all very well to suggest one should feed steers and not bulls, the former are a lot less efficient than bulls at converting feed into carcass weight. It takes a good performance to put on a half kilogram of carcass weight per day on a steer. If the value of that kilogram is only €4 and the cost of feeding that animal is €3.50 per day, it is obvious that winter finishers of steers cannot survive without a price rise over the winter period. That price rise must be in the order of 3 cent per kilogram per week but instead, there have been price drops in 2014.

The bigger picture is that beef producers cannot be expected to absorb continually unanticipated losses. Meat processors and retailers have a lot of soul searching to do. Retailers seem to think they have a right to beef produced at below the cost of production and processors are happy to collude with this. In addition, the processing industry must be held accountable on a number of issues. We still have had no proper explanation as to how the horsemeat scandal happened and nor do we have any sign of political will to punish the guilty. Farmers are sick of the extent to which they are punished for the slightest error. They see the heavy hand of the special investigations unit, SIU, being used to deal with the most minor of cases on-farm but they appear totally ineffectual when it comes to deliberate misconduct on an international scale, as was seen with the horsemeat scandal. Now it seems that farmers are paying the price for this, as factories blame the horsemeat saga for the greater focus on the bull beef specification.

Farmers have been misled on bull beef by processors. Less than two years ago, farmers were actively encouraged to buy Holstein bull calves from dairy farmers and were told money could be made by feeding them as bulls. The consequence was a collapse of the veal export trade and now, when these bulls come on market, we are told we have too many bulls and there is no market for them. It also is time to look at anti-competitive practices in the beef trade. In North America, processors are barred from controlling feed lots. Here, we have an increased numbers of feed lots under the control of beef processors, which are being used to keep a downward pressure on price. Worse still is the fact that the rendering industry is influenced by a single dominant player in processing and is uncompetitive. It is clear that all of these things are affecting the beef price paid to farmers and the reality is that price and specification appear to move in remarkable unison. The ICSA believes that it is now time for the Government to consider appointing a regulator for the meat processing sector. We have Government regulators for all kinds of private business sectors ranging from banking to telecommunications to broadcasting. Regulators reflect the fact that while private enterprise is to be encouraged, it cannot be allowed to operate unfettered and without scrutiny. Such a regulator must have power of investigation and real teeth. Moreover, it must ensure there is fair competition in the processing sector and that farmers have real choice when it comes to selling their livestock. The rendering sector needs to separate from processing. It is amazing that while Ryanair has been prevented from taking over Aer Lingus, we appear to have no concerns about what is happening in the rendering sector.

The Government must also revisit previous efforts to impose voluntary codes of practice on retailers. Voluntary codes simply do not work and we need to get real. It is not satisfactory that retailing is being dominated by a few multinationals but we still have no handle on the breakdown of margins when it comes to farm products such as meat, dairy or vegetables. I wish to emphasise that farmers are sick of what is going on. Farmers have bent over backwards to comply with cross-compliance. They went further and signed up in great numbers to Bord Bia's quality assurance because they were told it was essential in delivering top-priced markets for Irish meat products. At this point, there is complete frustration with beef quality assurance. It has been manipulated to the extent that some categories of stock are now subject to huge discounts and in some cases are unsaleable without the certificate, yet quality assured bull beef producers derive no benefit whatsoever therefrom. While I do not advocate this, many farmers are openly discussing a refusal to participate further in the beef quality assurance scheme and I cannot blame them. The industry is in trouble and many finishers and suckler farmers are intent on quitting and perhaps rearing dairy replacements on contract. However, a complete review of what is being achieved by the beef quality assurance scheme is required. If farmers cannot be assured of some stability, even at a time when the export markets are reasonably secure, what is the point of the scheme at all? The final straw for some farmers is the fact that the Minister met the processing sector recently but it appears to have been a complete waste of time. Astonishingly, the Minister did not even issue a press release on the outcome of the meeting. What does this tell one?

I will conclude by urging the joint committee to do everything in its power to make the beef crisis a key concern of the Minister and the Government and to push for greater regulation of the processing and retailing sectors, as well as greater focus on the anti-competitive elements to which we have referred.

Andrew Doyle (Wicklow, Fine Gael)
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I thank the witnesses and invite Mr. John Comer, president of the Irish Creamery Milk Suppliers Association, ICMSA, to make his presentation.

Mr. John Comer:

I thank the Chairman and the joint committee for the opportunity to put our views as to where we perceive the genesis of this crisis to be and on some potential solutions in the future. This is a real problem on which we have forwarded a comprehensive document to the joint committee. I would prefer to submit that to the evidential database rather than to read it out. Instead, if it is all right with the joint committee, I will make a few points in my own words. A real problem has arisen that highlights the absolute sweeping volatility that can take place in the beef sector overnight. I have to hand prices that I could use to demonstrate this point but will avoid repetition of the facts and figures regarding the percentages of price falls and so on that already have given by my colleagues in other farm organisations. In reality, most of this volatility has been concentrated in the past three to four months and we must ask ourselves questions as producers of beef, albeit perhaps a different kind of beef in the future. At present, the dairy stock here stands at 1.1 million, which is projected to grow and, consequently, much of the beef will be coming from the dairy farmers. I suggest that over the next five to six years, probably well over half the beef will come from the dairy industry.

The question is whether that is what the consumers of Europe and the wider world want. A strategic comprehensive plan is required that will take the scope of the longevity of the production of beef. At a minimum, from conception to plate, it takes three years if one takes into account the nine-month gestation period and so on. We cannot end up in a position in which our industry and all the players involved therein tell producers what the marketplace will require but when they get there as producers three years later, there is no margin in it. The critical phrase in this regard is "net margin". A situation has developed in Ireland over the past six months in which prices fell from an historic high down to a negative price at which the primary producers are not making a margin. To provide members with an illustration of how pronounced is the problem, I had a telephone conversation with a guy who had a live Limousin bull under 16 months old that was killed out at 580 kg. The bull was graded as U2 yet his price was cut in the factories by 90 cent per kilogram, which amounted a cut of €457.20. That meant the farmer's margin was gone and yet, he had been advised to breed that type of animal. He had been told the consumers of Europe and the world would want that.

How can one allow such a situation to develop in an industry that is so important to the nation? There surely must be a better way, that is, a better collaborative approach by all the stakeholders to put in place a structure that at least at a minimum can deliver some sort of margin to the primary producer. While one could argue this was a reflection of the marketplace, the reality, as illustrated by the other farm organisations, is that in France, Italy and Spain, prices are holding their own. Moreover, according to the Bord Bia figures that have been produced for the United Kingdom, steer and heifer prices have increased slightly year on year. There is a deep suspicion abroad regarding the role of the meat plants. There definitely is a perception that some sort of market manipulation is being orchestrated by other players in the industry's chain in order to take a higher margin for themselves.

Farmers are saying to me that if it waddles like a duck and quacks like a duck then it must be a duck. Some structure must be put on this. The Minister for Agriculture, Food and the Marine must take some responsibility in this regard. His aspirations for Food Harvest 2020 are noble, but rhetoric will not be of any use. I am not here to specifically target any political organisation but a good deal of work has been done and it will be completely undermined unless the support structures that are put in place are backed up and we find out the reasons this has happened.

As an industry, we need strong competition in terms of live exports. Irish cattle that are exported to Spain, Italy and other countries are not discounted when slaughtered in those countries, yet we have a situation in which cattle posted on 1 April of this year that are exported to another jurisdiction on the same landmass will be classified as out-of-spec cattle. How can we in the Republic of Ireland compete in a market in which that change has developed overnight?

In the dairy industry, if somebody changes a specification and it is not the panacea or all that is good and holy in the farming community, at least there is a long lead-in to any changes. We cannot allow a situation to develop in which the specification changes overnight and the primary producer has no chance of being able to react to what is now perceived by the consumer to be a new requirement in respect of food production. The Minister, all political entities and people who have been elected to represent the citizens of Europe need to say that we operate in a Single Market and that a situation in which there is a different specification for one type of animal in one jurisdiction and another type of animal in another jurisdiction, to the detriment of the primary producer, cannot be tolerated.

In terms of how we can improve matters, the message I would like to get across here today is that we must bring all the stakeholders in and put in place a strategic plan that is sufficiently robust to be able to analyse, strategise and take away the powers of the middlemen and perhaps the powers of the multiples to dictate an environment that might not necessarily be realistic. Why is it the case that in another jurisdiction an under-36-month animal is fine for certain consumers in Europe while in our jurisdiction an animal that is over 30 months is deemed to be out of spec? I am not sure that the system we have augurs well for the future of beef production in this country. The consumer and the primary producer are being manipulated and we need to find a strategy that will reduce that to the minimum. What I have said is structured in this document, but I have put my own words on it.

Andrew Doyle (Wicklow, Fine Gael)
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Thank you, Mr. Comer. I invite Mr. Spellman, chairman of the Irish Co-operative Organisation Society Limited, ICOS, to make his presentation.

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.

Andrew Doyle (Wicklow, Fine Gael)
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As a vote has just been called in the Dáil, the committee will have to suspend. The four presentations have given us food for serious thought and I will ask members to put their questions as soon as we return. The witnesses' presentations contain worrying evidence on what is happening in the industry. The committee takes this matter very seriously, and that is the reason we are holding this meeting. I apologise for suspending the meeting, but we are in the hands of others.

Andrew Doyle (Wicklow, Fine Gael)
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Mr. Henry Burns has indicated that he wants to make a brief contribution. Members may need clarification on issues. I hope we get to the meat industry presentation as quickly as possible, because the presentations so far have given us a lot of information and have raised serious questions which must be posed to the meat industry today and to others, although on another day.

Mr. Henry Burns:

I appreciate the opportunity to make a couple of points. The organisations have provided much information and I concur with much of it. What ICOS said about the marts is a huge issue - the kernel of the issue. We killed 1.4 million cattle the year before last and 100,000 extra last year. We are trying to kill 100,000 more this year - in other words, we are trying to kill 1.6 million cattle this year versus 1.4 million two years ago. The factories and the Minister encourage people to keep these calves, but the bottom line is that the farmer is no longer in the driving seat. Once a calf is six weeks old, it is trapped on the island of Ireland. I describe it that way. The animal appears to be trapped on the island. Our options are running out and the farmer is paying the price.

Another very important issue - I know we are not here today to discuss it - is the trade talks with America, Brazil and other places. Huge damage could be done here. I think there will be an announcement fairly soon that America is open to beef from Europe, and there will be great fanfare around that. The American beef market is running at around €1 per kilogram below the Irish or European price. It is thousands of miles away. There will be fanfare around the announcement from the Minister, Bord Bia and lots of other people, but the bottom line is that it is €1 per kilogram under the European price. We have a market 70 miles up the road across the Border and certainly across the water which is €1 per kilogram ahead, but we cannot get into it. There is a huge logjam here for the Minister to sort out.

We have heard about all of these so-called markets, including Japan. When I put that to the representatives of the meat industry in the context of the current problems we have with marketing and prices, they smile and say they have not got a kilogram in to those markets yet. We need some reality. We need to stop stargazing, look closer to home and sort out those problems.

When we reached that 1.4 million kill figure, farmers appeared to be in the driving seat and the factories were ringing them. Now they are ringing them and they will not answer the telephone. As a result of the Minister’s meeting with them, the factories issued a press release which included very little but contained a list of telephone numbers of all the factories. I know one person who had 20 animals to be slaughtered and rang all of these numbers but could only have one animal slaughtered. I do not know how many factories are on the list, but the press release was published in the Irish Farmers Journal.
We need to take stock of the competition and what the Minister needs to do. This started out as a bull beef crisis but then moved to affect what were supposed to be in-spec bullocks and heifers. It has moved into the marts along the west coast because of a lack of competition from the North of Ireland, which is so important. Deputies Éamon Ó Cuív and Michael Colreavy and Senator Michael Comiskey are well in tune with the live trade and the problem has filtered down to the South to affect the dairy calf which is almost valueless. We were going to be the new boys in town, with the Harvest 2020 strategy. We were going to be like the Starship Enterprisetaking off and showing the world how to do things. People are on the verge of shooting calves or putting them down because they have no value. Where does that leave us? This is a huge issue. We need to consider how to sort out the problem and not end up with it again.
Looking back to 2010, this country exported 340,000 live cattle. Two years later it was no accident that we had a tight supply and farmers were able to get a price with a margin. The factories and the Harvest 2020 project encouraged farmers to keep extra cattle and we are now trying to kill 200,000 more, but the farmer cannot get a price with a margin, which is totally unacceptable. These are issues for the Minister to resolve. At one stage he said he had no role. Then he invited in representatives of the factories. That is not acceptable. This is the biggest industry in the country, whether one is a dairy or a suckler farmer. Whether one is a small farmer in the west or a big dairy farmer in the south, it will take millions of euro out of the industry. We spent all of last year trying to keep European and rural development moneys in the industry. As our president said, these cuts have the ability to take €174 million out in a full year. It is, therefore, a huge issue for the cattle industry. It is a crisis that affects cattle, marts and farmers and could even affect animal welfare if it is not dealt with.

Éamon Ó Cuív (Galway West, Fianna Fail)
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I thank the four organisations for their very informative presentations. We have a crisis, but it had a long gestation period. We should face up to this and when we try to resolve it, we should do so not only for the short term but also consider the underlying weaknesses that have caused this chaos. The first thing that struck me and on which I concentrated when I became spokesperson on agriculture was the need for the farmer to get a fair price for product, whether dairy or beef. At the beginning it was liquid milk, then vegetables and now beef. In the case of all three, we have seen manipulation and serious concerns expressed about the way the market works.
The committee conducted a thorough examination of the grocery sector which focused on the power of the multiple. We then had several debates on live exports to Britain. I have persistently asked the Minister why one cannot put a truck on a boat in Dublin when one can do it in Larne to travel to Stranraer. I am glad that I can kill one red herring today - the British consumer is not paying a heap more for British beef, compared with Irish beef. The price difference is in the factory, not on the supermarket shelf.
The issues are price differentials and changes. There are different prices for the same type of animal in the three jurisdictions. That is a major concern because if the price is down across Europe and these islands, one can at least say the market is not good, but the difference seems to be becoming more acute.
The second issue is the changing specifications. Two things are happening. If one has in-spec cattle, there are more deductions and it is harder to get a premium price. Many more cattle are being deemed to be out-of-spec and there is a huge clip in price. This seems to lead to an issue about the power of beef processors. Justin McCarthy wrote an editorial in the Irish Farmers Journallast week about retailers being behind this ultimately and indicating that it was not just processors, that it also had a retail arm. This is the issue with which we grappled for over a year - the power of the multiple. We need to examine its power to work the market. The hidden hand of the multiples might be involved in this issue.
Barriers to trade on this island and between Ireland and Britain seem to become more acute all the time. Do we know the exact quantity of imported beef being processed in this country, particularly from Poland? Do we know what happens to that beef, where it goes to from this country and under what label? Is anybody tracking every piece coming in? Last year we could not track horsemeat. Do we know exactly what happens to all of that beef and what impact it has on the market?
There seems to be uncertainty and a lack of clarification about the four movement issue. I tabled a parliamentary question on this issue last week and the reply on what was meant by the four movements was less than satisfactory. Its sudden imposition seems to be causing problems for the way cattle farming is conducted. It affects not only factory-ready cattle but also has a knock-on effect on selling calves. One cannot sell a Holstein-Jersey cross cow. One effectively gives it away because there is nobody to buy it as there is no live trade in calves out of the country and nobody wants them because of what has happened.
The response to date has been totally inadequate. None of us, the Oireachtas, the Minister or even all of the organisations represented here, has got on top of this issue. I have a few suggestions to make. One of the best ways to concentrate the minds of those who might be manipulating the market in some way is to make it absolutely clear that the Government does not care whether it takes two years or ten, that it will pursue this issue and call for major structural changes over whatever length of time it takes to bring them about. If one knows that it is determined and will go through fundamental change, that will concentrate the mind because they are thinking in the long as well as the short term because they have long-term investments.
Since last autumn I have been calling for an Irish inquiry, as well as an EU inquiry, into the operation of the free market. I have issued several press releases on the issue. If we were to put it on the national agenda, if the Minister were to say tomorrow that he would back such an inquiry, at home and abroad, that would begin to concentrate minds.
I was very taken by the phrase used to the effect that if there was anything worse than a State monopoly, it was a private one. We know where there is over-concentration of ownership, whether it be in the media or elsewhere, that regulation clips in.

We must look at the structures, given that so much of the industry is controlled in a small number of hands - in particular the offal market which is totally controlled - whether it is contrary to competition law, and what can be done in that regard. I suggest we all agree, because there seems to be a delay in bringing forward the legislation, to introduce a groceries order on a legislative basis, with an ombudsman. I understand the delay does not have to do with the consumer side but with the merger of the Competition Authority and the consumer authority. I suggest we forget about the merger and get on with the groceries order in the meantime and that when the legal difficulties have been resolved, we can deal with the merger.

We could call for an immediate examination by the Data Protection Commission of access to the animal identification and movement, AIM, system and the computerised maintenance management system, CMMS, the information the factories have and whether it is contrary to data protection legislation. It seems to be totally contrary to data protection legislation that they can find out how many cattle somebody has on a farm. I have no doubt that the Data Protection Commissioner would be interested in the issue if there was any validity to breaches of data protection legislation in that regard.

I seek clarification on the issue of levies raised by the ICSA which has suggested what could be done without levies. Currently, farmers are hugely affected and confidence in farming is affected. Considerable financial pressure is being put on farmers and there are knock-on effects on sales and people investing in the main produce from dairy cows. It is a major national issue. As has been pointed out by the IFA, there are considerable national financial ramifications. Would it be possible for all of the farming organisations to get together with politicians to draw up a common list of actions such as opening up the live trade and breaking down barriers to ensure free trade?

The last straw for me was when people tried to divide the island. We have a Department of agriculture in the North and in the South and I find it difficult to understand why the two Ministers cannot get together. Both come from the Nationalist tradition and say partition of the island is not acceptable in the cattle trade and that we will not accept it. Any artificial manipulation of trade between the North and the South would be contrary to everything for which we have worked politically and economically for 20 years under the Good Friday Agreement. What we should do is break down the barriers and create a common market for Irish goods to put them on world markets, not create artificial differences that make it impossible for a farmer in County Monaghan to sell cattle into County Fermanagh or County Armagh. That is utterly ridiculous and we need to take action on the issue. Luckily for us, we have a colleague of Deputy Michael Colreavy in charge of the Department in the North. I am sure she would be more than willing to meet our Minister and knock down barriers. There is at least a sea between this country and Britain, although I do not agree with the difference in that regard either. I fought against it for months. It is an utter disgrace to have a barrier on the island.

Andrew Doyle (Wicklow, Fine Gael)
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There is a vote in the Seanad.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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I will begin by apologising for Deputy Martin Ferris. He was supposed to attend the protest today, as well as the committee meeting, but he cannot be here. He rang me to ask if I would deputise for him. This is an issue of deep concern to him.

I thank the four organisations for making their presentations. This is an issue of which I am aware from talking to farmers and farming groups locally in the north west, but nonetheless the presentations were disturbing. What we are looking at is a fundamentally flawed system. I probably have more questions for the meat industry than the representative groups because I am aware of the concerns of farmers locally. The industry has incredible power. It would be akin to me being a producer of goods from which I would make a profit from their sale but where someone else had to grow the crop for me. I could tell them what I needed – X, Y and Z - the quantity of product required and the price I would pay. Then when the people producing the crop on my behalf had grown it and did not have an option to go elsewhere with it, I could say I did not really need X, Y and Z but A, B and C and that I would take X, Y and Z off their hands and would not pay for it. Is that not a lovely position to be in?

I should have conveyed my best wishes to Mr. Eddie Downey and Mr. Patrick Kent on taking up their very important jobs. I am sure Deputy Martin Ferris would wish me to extend my best wishes to them.

What is wrong is that we have a deeply flawed system. It smacks of the same phenomenon that we saw with the multinational supermarkets in that they go to growers and agree a price for vegetables, meat, milk or other product. They have a captive audience which cannot go elsewhere and can pay what they want. That is wrong. I cannot understand why it is tolerated, as it damages the interests of farmers. We have heard compelling evidence that this is the case. It damages consumer and Ireland’s interests. How can we have any confidence that the targets set in Food Harvest 2020 will be achieved when there is uncertainty permeating the entire market? What we have is a monopoly and there appears to be evidence of anti-competitive practices. One could ask whether the fact that one has four factories means that one has competition by default. No, it does not. Is there a role for the Competition Authority or has it been asked to become involved? Is there a role for a monopolies commission and has the issue been considered?

I agree with Deputy Éamon Ó Cuív on the impact of the introduction of impediments to the export of cattle to Britain and, in particular, Northern Ireland. We should be able to sort out that issue. All it requires is for the two Ministers to talk. We should not need weeks and months to prepare a report. It is something we should be able to sort out now. I do not have questions because the delegates have painted a very bleak picture of what is happening in the country. We need to sort out the matter very quickly.

Willie Penrose (Longford-Westmeath, Labour)
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I thank everyone for the comprehensive presentations. As someone who comes from the heart of the area where some of what is being spoken about is prevalent and relevant, I am acutely aware of the impact it is having. It is not today or yesterday that I used to talk about this type of issue. Mr. Spellman referred to feed lots. I remember railing against the major processors engaging in the types of thing outlined and getting farm payments.

They built up significant farm payments through this type of factory inspired approach, which is something I railed against at the time.

There appears to be a concerted practice of market manipulation involved and it is amazing this has escaped the supervisory tentacles of the various authorities involved. The Competition Authority should surely have been aware of it. One of the presentations suggested the EU Court of Auditors is very vigilant in terms of what we would consider minor errors, and that it comes down like a tonne of bricks on them. I agree with Deputy Colreavy that it is time some of these bodies started to take a detailed look at this. It has gone beyond time for this.

Everybody advocates a free market and Deputy Ó Cuív made a very good point about State monopolies. The market monopolies are worse, because they race to the end line and do not mind who they trample on to achieve a result. I agree with the suggestion it is time to appoint a well resourced regulator to deal with the meat processing industry once and for all, because there are two many tales about what is going on. They cannot all be old wives tales. These tales have not just come out now, they come from as far back as the 1970s. I remember the old monetary compensatory amounts, MCA, system and there were all sorts of stories about it at the time. Strangely, this now seems to be reproduced in a different format, but without that name being applied to it.

It is time for us to take a detailed look at the system and to put in place a system for all Irish food. This may be an ambitious plan, but it is time it was done. It is not good to allow the distortion of the market to continue beyond beef, facilitating the construction of barriers and impediments which are anti-competitive and contrary to EU policy, particularly in terms of the free movement of goods. That they can do this in the middle of the production season, when people cannot alter their behaviour over night, is serious cause for concern. I was interested to hear that the rules on the quality bonus scheme were rewritten in the middle of the game. This is tantamount to market manipulation also. I may have misinterpreted the detailed and excellent submissions, but some of the remarks made seem to point to some form of collusion between the larger multiples and the major processors. Do any of the witnesses feel this may be happening? Are the heavy hands of both intertwined behind their backs, unseen, unheard and unspoken, but delivering?

I have one other question on the issue of the factories. When talking about beef, we talk about four quarters, but there is now a fifth area and there is some money hanging around, for the hide, the tongue and various bits. Beef was probably never as profitable as it is now. Years ago, this area was a great excuse for the price of cattle not being as attractive as we all thought it should be. Is there any sign of any of that money coming back or is it being confiscated and put into the soup? Is it going one way, into the bottom lines for the factories? It is time we had an in-depth look at this situation. Many farmers are teetering on the brink, but factories have never been as well off. This is a clear contradiction that cannot be tolerated for much longer. I will support anything this committee can do to bring this issue to the fore. It is time there was a Government initiative in this regard. It is time to step onto the pitch and bring this issue to the fore at national and European level. Let us walk, rather than talk.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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I would like to congratulate the two new presidents and wish them well in their terms of office. I look forward to working with them over that time.

We are all at one here on this issue. Everybody is probably waiting anxiously for the next section of this meeting. The point has been made that the goal posts have been changed regularly, but this is not a new phenomenon. This situation has arisen many times. We get two or three good years, but then we hit a bad year and then have two or three bad years and so on. We need a short-term solution now, but we need a long-term solution for the future. Farmers and producers need certainty from year to year, rather having to rely on what may happen. We need engagement on this.

This committee did significant work with the grocery area where legislation is overdue and needs to be moved on urgently. We did some very good work in that regard last year. I am aware it is not on our work schedule, but perhaps we should use the committee in the same way to do an in-depth investigation on the meat industry. There is scope for the committee to do this and I believe the appetite for that exists now. We should bring in all the stakeholders. Having listened to the presentations here today, I have been reinforced in my opinion that the large multiples have a significant role to play in this also.

I compliment all those who made presentations on their presentations, in particular the ICOS presentation which lays out the bare facts of the current position for everybody to see. A concern brought to my attention in the past week was raised in one of the presentations, namely, who has access to the AIM system within the factories. This is a serious issue. If somebody had access to some of our personal details, there would be uproar. This is something that needs to be investigated. I would support Deputy Ó Cuív's suggestion to bring in the data protection officer or whoever is in charge to the committee.

This is a serious matter. Who controls access and who should have access to the system? Is access restricted to a certain number of people? I believe it is restricted to a certain number of people and those people are the only ones who should have access to it, but I understand that almost everybody within the factory system has access to it and is able to manipulate the figures and know from day to day and week to week what is and should be coming in and can organise prices accordingly. This is a serious matter that should be investigated.

As I said earlier, the goal posts have been changed. The factories, Bord Bia and everybody else gave great encouragement to farmers to produce a certain type of beef, but now they have rowed back on that. Why has the position changed? I know there are more steer coming into the market. I see a big problem arising if we have a 50% increase in dairy production, starting next year. This is a concern. We are only a little over a year away from the abolition of quotas, which means we will see more Friesian type cattle coming into the market. This will cause a serious problem. Where are these cattle going to go? This brings me back to the point I made initially. We need a long-term solution to this problem. We must try to iron it out once and for all so as to introduce certainty.

The lack of competition is a serious issue. We have had one dominant player in the market place for many years and it seems to be getting more dominant as we move on. There also seems to be a connection developing between that dominant player and the large multiples. This requires a serious investigation. I do not have many questions, but I would like to know more about who should have access to the AIM system. What information do the witnesses have on that? Who has access to it and who should have the information?

Martin Heydon (Kildare South, Fine Gael)
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I thank the delegations for their detailed presentations. I will not rehash what has been said because we have a lot to get through. I will just make a few points and put my question. I concur with everything Deputy Deering has said and agree we need both a short-term and long-term solution. The consumer protection and competition Bill will be a key component for that solution, as will be addressing the relationship between the producer, the processor and the retailer.

Coming from a farming background, I would have a negative enough view of the factories. When this committee did its work on the grocery order and reported on it, we saw there was pressure on farmers and middle producers from the multiples also.

There is a problem in trying to force people to buy a product for which they do not have a market but the issue is much wider than that. The phrase "market manipulation" has been used many times today and that should prompt everyone to sit up and listen. In particular, the presentation from ICOS which made cost comparisons between the UK and Ireland was telling.

Reference was made to different jurisdictions and the rules that apply to different areas. In that context I am reminded of the story told by my colleague, Deputy Joe McHugh, from Donegal, about the pig farmers in Donegal whose animals are inspected by departmental inspectors and then, when they cross the Border to Foyle Meats, they have to be checked again. There is much overlap and duplication of effort in that regard. I ask the witnesses to give their views on the potential for an all-island approach to such matters. Would that be helpful? Would they see any pitfalls in such an approach?

Pat O'Neill (Fine Gael)
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My apologies for having to leave the meeting earlier and I ask the Chairman to stop me if my questions have been asked already. I was an active bull beef producer until this year and I do not know what divine inspiration prompted me to decide not to produce it this year. I still have a problem trying to get rid of steer beef. Mr. Spellman summed up the situation well when he referred to the cuts in the price paid to farmers by Tesco in the UK which is still charging the same price to its customers. That clearly explains the pressures being felt by those in the beef industry in this country. Can the panel outline when the 16-month condition came into effect and why that was driven by the meat factories. Regarding the overweight condition, it used to drive me demented when I would kill a lamb, discover it was 2 kg overweight and then not get paid for it. Are we going to see the same happening with beef? Will those farmers with carcasses over 400 kg be penalised? When was this condition introduced and how was it allowed by the farmers' representative organisations? I seek this information in the context of the discussions we will have with representatives of the meat industry later.

Mr. Henry Burns:

Regarding the point made about data protection, that is fully under the control of the Department of Agriculture, Food and the Marine. The Department has full control over the way that is regulated. My understanding is that it is managed differently in the marts to the way it is managed in the factories. In fairness, we do not need a big report into this or anything like that. The Department and the Minister administer this. In general terms, it seems to be the case that everyone knows everyone else's business and that needs to be examined by the Department.

On the 16-month condition, that seems to have come from the UK. It is a standard in the UK for British beef but we export a lot of bull beef to Italy, Spain and other countries in Europe.

Pat O'Neill (Fine Gael)
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The majority of our bull beef went to the Continent. We were exporting steers to England in the main.

Mr. Henry Burns:

That is correct. Let us look back to where we were this time last year. We had the horsemeat crisis which was not caused by the farmers, who did their job right. A whole raft of new specifications have been introduced because of the bad behaviour of various people and the farmers are being forced to pay for that. The Minister and others had to do a lot of work last year in order to keep those guys in business and this is the payback for the farmers.

On the weight issue, the bottom line is very simple. The meat factories got us into the numbers game, created the confidence in keeping those numbers and now they are starting to do whatever they want to do. We have met them and tried to alter their approach to this but were not successful. The Minister brought them into a meeting with us, at our request, but two days later some of them tried to lower the weight limit. We are saying clearly here that we need help with this. As farm organisations, we are not able to sort this out on our own. We are putting our hands up and admitting that we need help. There are 100,000 livestock farmers in this country. The industry is worth €2 billion in exports but it is under threat at the moment. It is in danger of going more and more into the hands of the factories. The factories are buying cattle themselves. They are putting calves on farms. They are working towards owning the cattle industry as well as the meat industry. All of the main players in the meat industry here have invested heavily in Europe and the UK on the back of the profits they are dragging out of Ireland. The Irish-owned meat industry is the only one in Europe that is able to re-invest its profits. This is a huge issue for farmers.

On the issue of live exports, we put six to eight months of work into getting a link into England from Rosslare with Stena Lines, which is now in place. That needs to be utilised fully which means greater numbers of cattle. In that context, we need the help of the State agencies such as Bord Bia, as well as the assistance of the Minister. We need to take a shortcut on this. There are farmers out there today who are bleeding serious money. I have gone into the banks with a number of farmers at this stage in an effort to get the banks to hold off. That is the situation farmers find themselves in - their backs are to the wall as we speak. We do not have time on our side. We need intervention from the Minister now. We need to see that he is on the side of the farmers on this. There are 100,000 livestock farmers in this country, big and small and the small ones are as much affected by this as the larger guys, even if they do not finish animals. The man that used to buy from the small guy does not have the money any more. We need direct intervention now. The meat industry was at the table during the Harvest 2020 discussions with the Department and was an enthusiastic supporter. We have heard all about the new markets but delivery at farm level is down by about 50 cent per kilo. We need to go the direct route and the Department has the solution to many of our problems.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Chairman, on a point of information, if the information is available from the Department's site to meat factories, then the Department is in breach of the data protection rules, not the meat factories. It is not unknown for the Data Protection Commissioner to make rulings that Government Departments are in breach of the Data Protection Act. The Department must focus on that issue immediately. I got into trouble for saying that I would repair the road to Mickey Joe's house because I mentioned Mickey Joe in my press release, even though nobody knew where 365 yards up the L6532 was. The rules are very strict and Departments must stick to them. In case there is any misunderstanding here, what I am proposing is that the Data Protection Commissioner is brought in to determine whether the Department of Agriculture, Food and the Marine is in breach of data protection legislation by giving information that is not necessary to the factories.

Mr. Edmond Phelan:

This committee will meet with representatives of the factories or the processing industry when we leave and those representatives will tell this committee that we are crying wolf. I am delighted that this committee is on our side. The processors will tell the committee that we are getting substantially more than we were getting four or five years ago but that was when the last disaster in the farming industry happened. There is no point in saying that we are up from a very low base when we are very quickly returning to that level.

All of the farm organisations worked very hard last year to open up the live export route to England but within a week of Stena Lines agreeing to ship cattle from Rosslare to Fishguard, we were told that Irish-born cattle in Northern Ireland would not be killed. That was giving us the two fingers, essentially. Straightaway it was decided that cattle would not be allowed off this island and would remain prisoners here.

Mr. Kevin Kinsella:

I want to answer the question on an all-Ireland policy. We need to step back from that a little and appreciate and understand that we have a single EU market already or at least, we are meant to have one. That involves the free transport, movement and sale of agricultural and all other produce across Europe.

We export 60,000 live animals to Italy every year. They go on to an Italian feed lot, are processed in an Italian meat plant and go on to a supermarket shelf there. Likewise, we do the same with Holland, Spain and several other EU countries. There is no problem with this. The correct EU identification labels are used which state the animal was born in Ireland but fattened and processed in Italy. There is no problem with this for Italian consumers because it is applied properly in an open European Single Market. Why can we not do the same in the UK? That is the issue the Minister must address. Artificial blockages to that market have been put in place. It is not about whether we have an all-Ireland policy or agreements with France or Belgium. It is about the operation of the Single Market. If a market access issue is preventing Irish farmers and exporters entering the UK market, then it is the responsibility of the Minister to correct it.

Mr. Eddie Downey:

Senator O'Neill was very clear when he said he has a problem with getting rid of steer beef. That is a sad statement when one thinks about it. It is unbelievable that we have a problem of getting rid of quality Irish beef, the best in the world. I accept the factories have high numbers of animals coming at them while we are asking them to take the cattle. That gives them power, however. As we know, absolute power corrupts.

There is corruption in the system. The processors and the retailers are in collusion. Everyone knows this. They will talk about fair trade and the manner in which they have to do it. The problem is that the high numbers of cattle have left the factories with power to put pressure on farmers over prices. However, it has left the retailer with more power against the factories. This is where the pressure is coming from and it is a weakness in the system. Unless legislation is introduced to protect all the players in the system, we are going nowhere. That includes the producer, the processor, the distributor, the retailer and the customer. The chains in the link need to be of equal power.

The Competition Authority was asked to look into the beef industry. It did but found nothing wrong and the fact the price is exactly the same from all the factories around the country is a pure coincidence. No one believes that. We need to examine this issue again.

The goalposts are constantly changing when animals are in the system. That puts farmers in the most vulnerable position possible. It is a high-cost system as every day a lot of money is spent on feed for animals. On current prices, every day an animal is on a farm, it is losing money. If it is during the summer, during the grass period, there is a different dynamic.

As for the question as to how much beef is coming in from Poland, that is a question for Meat Industry Ireland.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Do we know-----

Andrew Doyle (Wicklow, Fine Gael)
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There is a mobile phone interfering with the microphones. I call Mr. Enright.

Mr. John Enright:

Today’s presentations focused on the difficulties people have in getting cattle killed at the meat plants. If we cannot keep Northern Ireland buyers in our marts, the problems with finishing cattle will feed down further into the system and get worse. It needs to be dealt with quickly.

Pat O'Neill (Fine Gael)
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The three big players in the meat processing industry are AIBP, Kepak and Dawn. What percentage of the market do they control in Northern Ireland?

Andrew Doyle (Wicklow, Fine Gael)
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We should direct that question to the next delegation, MII. I am anxious to move on with the next session.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Do the farming organisations agree that we need an inquiry into the operation of the beef trade, both an Irish one and a North-South one agreed between the two agriculture Ministers in the two jurisdictions? In fact, that latter inquiry would be easy because Deputy Colreavy could put a word in for us with the Northern Minister. Do they agree we need an EU inquiry into the distortions of the beef trade in the Single Market? If €1,000 of a state grant were given to a company, the Commission would state that was a distortion of a trade.

Mr. Henry Burns:

There is an important point I left out. Hopefully, the groceries order will come for Ireland. However, 90% of our beef has to go out of the State and 90% is the trade. While we might feel we control the Irish trade, it is controlled by the meat plants. We can argue all day about lack of competition between the factories and having inquiries into them. We have proved every year that we have export live cattle to ensure the farmer can be competitive. Inquiries have a tendency to go on a long time. What we need now is action.

Andrew Doyle (Wicklow, Fine Gael)
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I agree this is a matter that needs to be dealt with without delay. I thank the four organisations for their collective contributions today which have raised several serious concerns such as the barriers to the free trade in beef and data protection, as well as the use of data to control the beef market. Transparency is a word we hear in politics all the time. It is about time we had a little transparency in the way this market is managed. There seem to be certain individuals who are dominant players in processing and rendering areas which has a significant effect on smaller abattoirs in the UK which would be otherwise happy to process Irish-sourced beef.

The beef sector was criticised for exporting the highest quality cattle on the hoof to Italy, a country which demands the highest quality. If that animal had been left in Ireland, what would be the price difference? It must be remembered, however, that this country cannot survive without a buoyant live export trade.

We will now hear from the meat industry. This committee has the opportunity to expose problems in the sector and air public grievances. It can point the finger at those sitting behind screens anonymously and demand they participate in these discussions. I believe we need some convention or a forum on this matter, a point raised by Deputy Ó Cuív. This would allow us to get answers to the immediate questions but, as Deputy Deering said, we need to get a long-term solution. Anyone who is going to invest in an enterprise wants to know they will make money out of it.

It is not a sin. One has to try to make money and one needs a margin so people can live. If we have a genomic scheme that is €80 per calf and somebody else claims a piece of that, it is not much good for the primary intention of that scheme, which is to improve the quality and efficiency of inside-the-farm-gate production. I note that there is something in the presentation to follow about the potential for improvements inside the farm gate, which is true, but what is the point in doing it if somebody else is going to take the benefits?

I will suspend the meeting to allow the witnesses to withdraw. I call on Deputy Deering to deputise for me for half an hour. I wish him well. I thank the members of all four organisations.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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We will resume the meeting. The Chairman had to slip away and will be back in half an hour. I welcome the representatives of Meat Industry Ireland, MII, Mr. Ciaran Fitzgerald, chairman, and Mr. Cormac Healy, director. I thank them for coming before the committee.

Witnesses are protected by absolute privilege in respect of their evidence to the committee. If they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable. The witnesses are welcome to make their opening presentations. They are using PowerPoint and everybody has a copy of the presentation.

Mr. Ciaran Fitzgerald:

I thank the committee for inviting us here. It is important that we have been invited and we are very keen to present the industry's view. The industry has delivered a very strong performance in the last five years. Last year exports exceeded €2 billion. The value of cattle has increased on average by €400 million in the last five years. It is the only agricultural commodity for which price increases have been sustained. The industry has delivered a very strong performance and transformed itself. Ten years ago we had a frozen beef commodity industry. Now we have a largely fresh produce industry linked to major European retailers and food service businesses. The business has transformed dramatically and delivered very strongly in terms of its investment in the productive sector. Mr. Healy will take us through some of the elements of that transformation and performance to take us from where we were to where we are.

Mr. Cormac Healy:

I thank the committee for the invitation to present here. Members have copies of my presentation. Given the time, I will try to proceed through it as quickly as possible, but I would like to cover it all. I will look at where we are now, the performance of the industry over recent years, the market situation, market specifications - particularly the young bull issue, which has already been discussed here - some of the real threats and challenges facing the sector, about which we need to talk, and some conclusions.

There has been much talk about Food Harvest 2020. We firmly believe much has been done in moving towards achieving those targets. As Mr. Fitzgerald said, finished cattle prices in Ireland have increased by approximately 40% over the last four years. That is a significant delivery on price from the market. Cumulatively, it is worth an additional €1.5 billion to Irish beef finishers over the last number of years. Today, despite weakening in the market due to market conditions, overall prices in Ireland remain over the European average price. When one takes all categories, including steers, heifers, cows and young bulls, and the mix of slaughters, we are at approximately 107% of the European average price.

We have the third highest steer and cow prices in Europe and we are at the top end of the price table. The heifer price in Ireland is fifth highest in Europe. As Mr. Fitzgerald stated, our exports last year topped €2.1 billion, which represents a 35% increase in export values since 2010 in year-on-year growth. Another important parameter is that we have built and expanded the quality assurance scheme to a stage at which it now covers 87% of all animals slaughtered.
We are in a good and strong position. There are issues, which I will deal with later, but overall this is a business in the economy which has functioned well in recent years. The graph on this slide shows exports, and I do not need to dwell on it because I have spoken about them. Ireland exports 90% of what the beef sector produces. Our export dependency is a far different dynamic from any other beef market in Europe and poses a challenge in terms of delivering on price, as we do not have a substantial domestic market to underpin prices.
It is important that we set out again the performance in recent years. The industry has achieved much in the past decade. Irish beef is now listed with more retail chains than beef of any other origin in the world. This is stated by Bord Bia and is delivered by an industry that has invested heavily in marketing, feet on the streets, doing business with retail chains and delivering the business. The sector has developed into a fresh chilled supplier of beef throughout the European market, which has taken a significant amount of investment. It involves a significant number of jobs in the Irish economy.
The graph on this slide shows the continuous growth in sale penetration to retail chains throughout Europe over the past decade. This has been happening since early 2000 and has meant a continuous increase in price over the past decade. There were ups and downs along the way. At one point in 2005 and 2006, imported meat from South America had a significant impact on the market. There was also a major sterling shock to the system, which affected many aspects of the economy, but the overall Irish food economy was affected by its heavy reliance on the UK market. The sector has delivered on price and in the past three or four years the price has gone from €3 per kilo to €4 per kilo. This Bord Bia graph shows a stepped movement of prices on a continuous upward trend in recent years.
That said, prices have weakened since Christmas, and we need to examine the reasons behind this. I hope committee members have a copy of my presentation document because the text on the slides is small from this distance. I will run through some of the key factors at play in the European beef marketplace. In recent years, consumption has been under pressure throughout Europe and in some of the key markets. We must remember that in many of the markets we serve there is still an economic downturn, and economic crisis is not just an Irish phenomenon. This has had an impact on consumer spending decisions.
In recent weeks there has been little promotional activity in beef retail because of its relative price versus other meats. The manufacturing beef trade throughout Europe continues to be quite weak. The committee may not be familiar with the fact that for the past six weeks no pork or pigmeat has been exported from Europe to Russia because of a ban imposed on 26 January. We are starting to see greater volumes of pigmeat in the European market because of this overnight ban and restriction on exports to Russia. This means beef processing companies have rising stock levels. The processing of cattle on a weekly basis does not result in all of the product moving, because of these difficulties in the marketplace. That said, Irish cattle slaughtering has increased by approximately 7% in the year to date. Last year European production declined but this year it has increased. This does not just affect Ireland; information from the UK beef marketing organisation shows a continuous decline in UK cattle prices in October.
The next slide shows the production levels and forecasts for beef throughout Europe. Last year beef production declined by just over 2% in Europe, which was a help in the overall market as there was less beef in the system. A 1.1% increase is forecast in beef this year in the European market. As I stated, the economic crisis has had an impact on consumption in many member states. After a significant fall last year a stabilisation in consumption has been forecast. I will go through some of the individual markets which are important to us. In 2013, consumption at retail level in the Irish market fell by 5%; the British market decreased by 3%; the French market decreased by 4%; the German market decreased by 1.5%; the Spanish market decreased by 4%; and the Italian market decreased by almost 4%. This is the reality of retail beef sales. Since Christmas there has been significant pressure on consumption levels.
The next slide shows the UK retail market. The overall volume of sales decreased by approximately 3% last year. This varied across the various categories of meat. The next slide shows information from the beef marketing agency in the UK on mince sales. More than 50% of beef sold at retail in the UK is in mince form. The graph shows a decline in consumption up to January. A comment published in the UK Farmers Weeklyat the end of February stated that low consumer demand for beef was holding back the market, as rising beef prices in recent years had turned some people to other meats. This is a factor in what is happening in the marketplace. As Mr. Fitzgerald stated, the Irish industry has delivered price increases. This graph shows an Irish steer price versus the continental price. It excludes the British price, but this information is in the documentation provided to committee members. The UK price is above the Irish price and the Irish price is above European prices. As I stated earlier, we export 90% of the beef we produce.
There has been considerable talk about market specification in recent weeks. Steer heifer grass-fed beef is our unique selling point. It is what our largest market, the UK, requires and what gives us our point of difference in European markets. This has been the clear message not only from the industry but from consumers and our key customers throughout Europe.

These issues were highlighted in the Food Harvest 2020 report and the subsequent report of the beef activation group. It was clearly stated in these reports that the industry saw itself developing and moving forward on the basis of steer heifer beef and comments to the effect that the industry has driven a bull beef production system in Ireland are inaccurate.
After the publication of the Food Harvest 2020 report, the industry introduced a quality payments system, about which we talked to the committee several years ago. It is a system that offers bonuses and tries to reward quality beef production from the suckler herd. At the time, an in-spec bonus was introduced, which was increased last year, ultimately to drive a focus on specification and producer take-up of the quality assurance scheme which the marketplace was demanding.
The UK specification at retail level for young bulls is less than 16 months. That is the requirement. There are limited opportunities to engage in young bull production above that age for supply to certain customers in the European market. It is processor-specific, depending on their customer portfolio. Therefore, our consistent message on bull beef production has been and continues to be that if producing outside the generic specification, one must do so in conjunction with a processor. That has always been the case and many producers are doing this successfully.
The final point on specification is that the industry will publish in the near future further confirmation of what it believes is the best way forward for the beef sector. Delivery on price, securing retail markets and the achievement of a premium in the European market for Irish beef will not be achieved unless we deliver what the consumer requires. We intend to publish further clarification about what the specifications are, but they do not include anything that is significantly different from what has been said.
With regard to young bulls, the industry met the new IFA president and his team at the end of January and we discussed issues that were of concern at the time. One of the main issues was young bulls and young bull slaughterings, on which the industry has responded. The young bull kill has increased from 4,000 head per week in the early weeks of January to 5,500 and in the past four weeks to 6,500. Last week there were 18% more young bulls killed than in the same week last year. The industry has responded to the calls from farm leaders and subsequent to our meeting with the Minister, Deputy Simon Coveney.
Obviously, there are concerns about current market challenges. That is understandable and accepted, but we must base them on what is happening and also be cognisant that there has been a very good performance. However, there are challenges and threats to the sector, to which we hope the committee will turn its attention very soon, as it has done in the past. The key one is the ongoing discussions at EU level on bilateral trade deals. They include the trade deal concluded with Canada at the end of last year, although there are outstanding issues and we are working with the Department and our European colleagues to try to address them. There is an ongoing discussion with the United States and there is talk that the Mercosur talks will be back on track. All of these present a significant threat and the farm organisations will have referred to them also. They present a real threat because of the potential for significant volumes of beef to come onto the market at considerably lower prices than European prices. We have spoken to the committee previously about that issue, but we believe our attention must be focused on it at present because there are many movements in that regard.
The other challenge we would highlight is the continual drive for on-farm efficiency. The industry has delivered and will stand by its record in delivering on price. It has had to meet very significant challenges. I referred to the sterling crisis, in which the currency changed against us by 30%. The industry has had to take serious measures in terms of its efficiency in processing and the delivery of product to the market and there is still more ground to be made up at farm level. The industry has been involved in work with Teagasc and other organisations, including the Irish Farmers' Journal, to examine what can be achieved from beef enterprises. Some very good results have been achieved, including some significant gross margins per hectare, through a focus on output, costs and grass utilisation, on which more progress can be made.
Overall, the beef processing industry has delivered strongly on marketing and marketing performance in the past decade. It has transformed from a frozen commodity business to a fresh chill business and delivered on price. The price has moved from approximately €2.30 per kg at the beginning of the decade to €4 per kg now; therefore, it is undeniable that there has been delivery on price. There is a weakening in the market, but that is due to market conditions which are largely driven by weaker demand. In-spec and producing animals to specification are essential and will be the single way to deliver the best returns. The industry has responded to concerns raised about the backlog in the processing of young bulls and acted on them. Given the platform that has been built and the penetration of Irish beef across UK and European markets and, I hope, in ensuring no significantly damaging trade deals are made, the future is positive and the industry and the sector will deliver on their Food Harvest 2020 targets. We also welcome the fact that the Minister has announced a genomics programme with support targeted towards the beef suckler herd and that matters regarding the CAP have been concluded. The industry would also state it has delivered in terms of a cumulative figure of €1.5 billion for beef producers in recent years in higher prices. Working from this, there is a positive future, although we must be conscious of the threats in respect of trade deals and the challenges in terms of on-farm productivity levels.

Éamon Ó Cuív (Galway West, Fianna Fail)
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I apologise for not being present at the beginning of the presentation, but I looked at it before I left. Unfortunately, I had another appointment.

While a great deal of information has been given, the delegates should look at the big picture. The big picture is that one group, the beef factories, keep making a comparison with EU prices, when the nearest and biggest single market for our beef is Britain. If prices were flat across Europe, it would be understandable that they would be flat here. However, in a free open market where, according to EU rules, everybody can sell equally where he or she wishes and what he or she wishes, the yardstick must be the British price. Nothing that has been said deals with that question.

In the past few months it appears that more barriers have been erected to trade. There should be a situation where one can sell wherever one wishes but, for some remarkable reason, it appears to be very difficult to get live cattle into Britain. However, as ICOS proved, the price of Irish beef on supermarket shelves in Britain is the same as that of British beef. There appear to be many new difficulties in obtaining proper prices for Irish cattle in the North of Ireland. They appear to be becoming nomads in their own land. I might be a simple guy, but as far as I am concerned, an animal born, bred, reared and slaughtered on the island of Ireland is Irish. It is extraordinary that free trade is not only breaking down across the European Union but also on the island of Ireland.

I have a number of questions. First, what changes have been made to the carcase specifications and what was the reason for making them?

When did labelling changes across the Border come into effect? What was the level of price drop for finishers when one compares January and February 2014 figures with the same period in 2013, after the average price with all of the discounts, out-of-spec reductions, etc., have been taken into account? I do not want the premium versus premium figure only to learn that a lot of cattle that would have made premium last year did not meet premium this year. I seek the average prices.

I am particularly interested in Polish beef. How much Polish beef has been imported for further processing in Irish factories here? Where has it been sold? Under what brand is it being sold? What arrangements are in place or what checks are carried out by the food authorities and the Department of Agriculture, Food and the Marine to ensure that there is transparency in the transmission of the beef to the final market and to ensure we do not have another horsemeat issue, where we do not know what came in or where it came from and where it went to?

I have another relevant question. How many cattle are being fattened by farmers on contract for the meat plants? Meat plants are contracting farmers to fatten cattle for them more often, and I am curious to know the figure. How many cattle are involved at any one time? What is the peak number of cattle that the meat plants have had fattened on contract? The factories own the cattle and can decide whether to bring them in as they see fit.

There seems to be a total lack of communication in the beef industry. I have been told by a lot of farmers and people who work with the agri-industry who have no personal involvement in farming that farmers have been encouraged by Teagasc and other groups to produce bull beef, that they were not told that it all had to be under 16 months of age and that they took the advice. Perhaps I misunderstood the witnesses, but I got the very clear impression that they said MII had, for some considerable time and way beyond the cycle that we are talking about, advised against the production of bull beef and said that people should produce steer beef. Can the delegation outline whether it gave that advice or whether Teagasc was privy to that advice? If we have a disjointed industry in which factories need one thing and the main advisory service that people look to for advice advises a totally different thing, then it is time we got communications together in the industry. I would be very surprised if Teagasc had been advised by the factories and encouraged the production of the wrong type of animal. I would be surprised if it took the risk of encouraging farmers to produce the wrong type of beef for the factories.

I have two final questions. Has there been much of a tightening up in supervision and the transmission of goods within the meat processing industry since the horsemeat scandal last year? Has it in any way contributed to what was in-spec last year suddenly becoming out-of-spec this year, because there is much more rigid control of the animals going through and much better labelling and because now an item must be called whatever it really is? People have said that the huge extra controls are a bit like the land parcel identification system for farmers. In other words, it is a lot more accurate this year than it was last year. Has this been a contributing factor in what has happened to the factories?

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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I thank the witnesses for appearing before the committee. Deputy Martin Ferris normally sits on the committee but he cannot be with us today and apologises for his absence. He asked me to substitute for him today. I know that he is deeply concerned about this issue.

Where do I begin? The meat industry exists to make a profit for shareholders, and there is nothing wrong with that provided it is done fairly, within the accepted laws of commerce and principles of good faith. I know from talking to farmers in my area of the north west that they feel that factories have a monopoly. They encouraged them to produce a particular product at a point in time but then said they no longer wanted that precise product but agreed to take it off their hands at a cheaper price because they wanted something different. Those farmers have been put to the pin of their collar, and in some cases beyond that, to sustain their farming activities because what they had planned to earn in income from the factories has not been delivered. They feel let down and cheated by the factories. They regard the choices and decisions made by the factories as price control mechanisms created to get a product more cheaply from those producers. The farmers feel they are a captive audience, because they produced what the factories said was going to be needed but have now been told it is no longer needed and that the product will be taken off their hands as a favour but at greatly reduced prices. They feel cheated.

The fundamental problem is that we have a virtually unregulated business scenario in which the law of a monopoly operates. I would like the delegation to convince me that my understanding is flawed. I believe the system is flawed and that there are not enough controls in place. I believe that the producers - the farmers - cannot have certainty to plan for the future in the present environment. I ask the delegation to convince me that my understanding is flawed, if it is so.

I also have a few specific questions, as it is useful to get information in this regard. I do not underestimate the challenge facing those the witnesses represent. Can they describe what connections its members have with factories in Northern Ireland, Britain and the EU? Can it describe the process used to create a specification? One of the complaints we have received is that a specification can be agreed but then changed. Is there a time limit for specifications? Is there a plan B for specifications? Is the meat industry the ultimate designer of specifications?

I was impressed by the statistic quoted by the delegation that the number of retailers listed has increased from 27 in 2001 to more than 75 in 2014. How does the industry negotiate the listings with retailers?

Does the industry understand the reason the primary producers, the farmers, need certainty in terms of planning for stocks, stock levels and stock types for a medium term future? If it accepts that they need that certainly can the industry suggest ways where that certainty could be made a partnership approach between the industry and the primary producers?

Pat Deering (Carlow-Kilkenny, Fine Gael)
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I thank Deputy Colreavy and call Senator Comiskey.

Michael Comiskey (Fine Gael)
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I thank the delegation for its presentation. One the face of it one would almost imagine there was no problem, yet a number of farmers are protesting up the street today. At our meetings with farmers in the past month or six weeks there has been anger at the way they have been treated, particularly the bull beef producers. They are suffering serious cuts and in some cases do not even get their animals slaughtered. That is the reason we are here and the reason we are asking all the questions. What is wrong with our neighbour, Britain, where we sent all our all our cattle in the past, as we do not appear to get a fair deal there? The lesson to be learned is that we must have live exports. We just cannot depend on the factories in Ireland, for whom the product is produced, and have to take a serious cut.

A question that has already been asked is how much beef is being imported. We hear stories about beef being imported and being held in storage. When needed it is taken out and depresses the market further. In the past couple of years when Ireland was in recession, the farmers were the people who were taking us out of it and getting the country back on its feet. Of all the jobs created, some 26,000 were in the agriculture sector, some of which would be in the meat and food industry. That is good and we all subscribe to that and push for its continuance. However, it is not fair that everybody along the line gets paid and the farmer takes what is left. What is the outlook for farmers? We do not want to continue to produce stock for which there is a bad price. What is the outlook for them into the future?

Pat Deering (Carlow-Kilkenny, Fine Gael)
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A number of issues have been raised.

Mr. Ciaran Fitzgerald:

I will take the issue of price in general and the comments made by Deputy Éamon Ó Cuív and others and what is the proper price barometer. In the past ten years, and particularly in the past five, prices have increased by 40%. From a European perspective, from about the mid-1980s to 2005, we were getting about 90% of the average EU price for our beef. That was our price and that was the European price. This transition and transformation in the past five years has delivered a situation where we are now at around 100% of the EU average but, for large periods of last year, we well above that level. That is the first point. The delivery piece has been quite exceptional and has been delivered not just by a rising tide but by increased investment and value added.

In terms of the other piece of that and how one makes comparisons, this industry has transformed dramatically. We sell cuts of beef. We do not sell carcases or live animals. Therefore, to take any particular live animal price in a market and try to reassemble that back to what should have happened and what is the best barometer of that price for a live animal in an Irish factory is just not comparing the same thing. The barometer that is most used - we hear much about it when it suits - is the R3 UK price which is for an animal that is UK based and gets a red tractor certification for it. We do not produce or sell that animal. We sell boneless beef cuts right across the EU. We export 0.5 billion tonnes of beef per year to the European market, 50% of that goes to the rest of the European Union and 50% goes to the UK. Clearly, in that marketing mix, one is trying to get the best price right across for all cuts. That is how one gets to the price recovery we are talking about.

In terms of barometers, while going back ten or 20 years one can pick a particular live animal price on the market and say we should aspire to that, we do not sell live animals any more. We do not sell animals that have red tractor certifications attached to them; we are selling boneless beef. All of that being said, the price recovery here has been quite exceptional, it has been strongly delivered by an investment in the selling of fresh beef from Ireland. The reason we get into markets is not just because there are broad supply and demand conditions, it is because hard work is done by Irish processors to secure supermarket contracts and contracts with companies such as McDonalds and others. That is the reason we have the profile for our beef sales. In response to this price comparison piece, one needs to look at what the industry here is selling and any of the barometers one might choose to use. Mr. Cormac Healy might deal with some of the other issues.

Mr. Cormac Healy:

Chairman, if it is all right I will touch on some of the issues. The information published by the Department of Agriculture, Food and the Marine and Bord Bia shows that the price in Ireland today is still at the upper end of European prices. Deputy Éamon Ó Cuív mentioned the comparison with the UK. The chairman, Mr. Ciaran Fitzgerald, has said we are selling cuts. Some 50% of our overall beef, not the full carcase of an animal, goes to the UK; there is mix right across Europe. We are very lucky to have the UK market, which is the world's highest beef price market, on our doorstep. Obviously, the industry has focused significantly on it, in terms of marketing Irish beef and Bord Bia has focused its resources significantly on the UK market. There is no question but that it is a huge and invaluable part of the overall mix, but it is 50% of the mix and the other parts of the animal, the other cuts, are going across all markets and, therefore, it is relevant. We are exporters on the edge of Europe into the European market and we are performing well beyond many other beef markets because we are exporting 90% of what we produce.

Clearly, if one goes to markets such as the UK which has a self-sufficiency rate of 70%, or Italy at 50%, or France or Germany, they have major domestic beef production that is achieving their premium price in their markets.

I was asked the price fall since January. The report on prices is published each week by the Department of Agriculture, Food and the Marine. The price for R grade steers was about €4 per kg or €5 kg in the first week of the year. The last published price from the Department - not for last week - was €4 per kg. They have come a little, but that is a 5 cent to 6 cent fall. The Deputy asked for prices that include everything, "in spec", "out of spec". Those are the reported prices. We are happy to provide any of those to the committee in correspondence. They are published and are available.

The issue of specifications was raised in a number of questions. The industry has not been out there encouraging bull production. The Food Harvest 2020 report and the beef activation report - we are happy to provide those reports but I am aware the committee dealt with them in great detail at the time - clearly point out that the view of the industry and, I am sure the view of Bord Bia if asked to present to the committee, has been that steer heifer grass-fed beef is the direction for the Irish beef sector. It has been the mainstay of its progress in European markets and will be for the future. In regard to bull production, recognising that farmers were moving in that direction to some extent, looking for the obvious efficiencies that go along with it, and also recognising the fact that we are going to have an increasing dairy herd in the country, it was clearly stated that this should be done in conjunction with processors.

Much as people might like to talk about angst or mistrust, producers are working with processors in great numbers. They are producing either bull beef to a particular specification or producing beef under various other schemes, depending on the breed of the animal and other factors. There is significant work, co-operation and co-ordination between producers on the ground and their local factories. The advice on bull production has always been that if producing outside the under-16 month age guideline, which reflects the retail specification in our largest market for beef, the United Kingdom, production should be carried out in conjunction with the processor. This must be achieved at an early stage, not a month before the animals need to be slaughtered. Some companies have worked more on bull beef sales because they have particular customers on the Continent. They engage from the very earliest days with producers. They advise them on nutrition and the production system, and they schedule in producers. There is no question about clarifying that.

Specifications are ultimately derived from what the consumer requires and from what retailers require in terms of delivery to consumers. Much of this relates to the size of a steak cut, for example. If the retailer wants a trade involving two strip loins or fillets of a particular weight and at a particular price point, that is what is required. A strip loin that is too big must be cut too thinly to make the weight and therefore it is not what anyone particularly wants. The demand is ultimately derived from what retailers require, although there is some variation. What we have sought to do regarding in-spec and setting out the details is describe the types of animals that will meet the requirements of the vast majority of customers. This is because those are the animals that will ultimately secure the greatest return.

I was asked what we can do in future. Deputy Colreavy asked about what we can do to improve in this regard. There is no question but that there is always room for improvement. Over recent years, the beef technology adoption programmes have been progressing. They are funded by the Department. Farmers, with advice from Teagasc or private sources, are attending discussion groups focusing on what they are producing, costs, etc. We have tried to feed into these and engage with those involved. On many occasions, the groups visit factories to examine the process. Around the time of the quality payment system, QPS, we engaged very much in demonstrating what occurs when one breaks up an animal. In fairness, although the producer supplies an animal to the factory, it is sold in the form of a vast array of cuts. We can and continue to demonstrate the process. Equally, the industry is committed to setting out what it believes to be the specification that will meet the vast majority of customer requirements across the United Kingdom and European markets and that will, as a consequence, have the best chance of delivering on price.

There have been no particular labelling changes. Deputy Éamon Ó Cuív mentioned that an animal born, reared and slaughtered on the island of Ireland is Irish. Unfortunately, if it is slaughtered in Northern Ireland, it is slaughtered in the United Kingdom according to EU regulations, and this must go on the label. We did not make the rules; they are European regulations.

Reference has been made to the live export trade. It is part of the overall sector. We represent an industry that has invested in infrastructure, sales and marketing teams, people and jobs in this country, and we make no apology for saying that. We want to see cattle that are born and reared in Ireland processed here and brought to the adult stage with full added value, thus supporting fully Irish jobs and the economy. Live exports can operate, and if they operate on a fair playing pitch that is fine. However, we are not going to engage in a discussion on whether one should promote live exports. Over the past five years, live exportation has not been a driver of the progress in the sector. Therefore, it has the role it has, but it is not something from an industry that wants to see investment in infrastructure and jobs on the ground. We do not believe it is the future for Ireland. The future for Ireland must be in adding value in food production and producing shelf-ready products, rather than exporting produce before it has achieved its full potential. That is a general view on the matter. There are those whose jobs rely on this.

I may not have hit on some points but I will revert to them.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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We can return to them if issues arise.

Martin Heydon (Kildare South, Fine Gael)
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I thank the witnesses for their presentations. I wish to tease out a little more the change of specifications and the moving of the goalposts. When exactly did the meat industry start communicating to farmers their limited options for beef over 16 months? The IFA said in its presentation that in 2011 the factories strongly encouraged farmers not to export their dairy calves and keep them for bull beef. Much of the difficulty with what Mr. Healy said today is that the current crisis and difficulties seem to have arisen out of the blue all of a sudden. One could nearly pinpoint their arising to a date in late December. Mr. Healy would have us believe the difficulties slowly crept up on us and that he has been saying for a very long time that farmers should be careful in this regard. The problem seems to have hit farmers all of a sudden.

More than one contributor referred to suspected market manipulation. Deputy Éamon Ó Cuív mentioned ICOS representatives' recent visit to England. Let me tease this out a little more. I accept the point that 50% of the cuts go to the United Kingdom. ICOS representatives found Irish beef and British beef sold at the same price per kilogram in Tesco stores. Two identical cuts of brisket beef that were photographed, one labelled "Irish" and the other labelled "British", were both priced at £8 per kilogram. Therefore, the Irish farmer is receiving 15% to 20% less per kilogram. Where does the margin go? Can we take it that if the meat industry is not taking it, the multiples are doing so? Can we join the dots in this regard?

Overall, how much did the horsemeat scandal cost the industry last year? Many farmers are telling me that it is a case of the meat industry trying to make the money back and that farmers are ultimately paying for the scandal. Could Mr. Healy comment on that?

Pat O'Neill (Fine Gael)
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I would like to refer to page 12 of Mr. Healy's presentation, which mentions cattle prices in Great Britain. I presume that the prices shown on the graph are in sterling.

Mr. Cormac Healy:

Yes.

Pat O'Neill (Fine Gael)
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That should have been clarified because this information will go on the record of the Houses. The figure of 320 for bull beef in England appears as if it is €320, which is less than £320. This should be changed before the information goes on the record.

Does the meat industry realise why there were thousands of farmers marching today? The industry is in crisis and there is no denying that at present. Farmers cannot get cattle killed. Mr. Healy is stating the kill of bull beef has increased to 6,000. One must remember, however, that the farmers have been waiting months to kill the animals. The problem is that the animals are now over the stipulated age and the farmers are receiving a depressed price for them.

If something comes out of this meeting today that can improve the lot of the primary producer, I will welcome it, but given what Deputy Ó Cuív raised and what ICOS and Deputy Heydon have mentioned, that the cut for which the farmer in Ireland is getting 20% less is still being sold in an English supermarket at the same price, the MII, as an organisation, will be accused of being in collusion with the large multiples.

On producing statistics, the MII states that we are the third highest for steer beef and heifer beef and the fifth highest for cow beef, or, maybe, I have it the other way around. If one takes the price of beef in the main markets in Europe, those of Italy, France, Germany, Spain and the United Kingdom, the average price per kilo is €4.26. The graph in the MII's presentation shows figures from countries such as Poland, Romania and all the other new EU states which do not provide the traceability that Irish farmers provide. Irish farmers are producing a quality product that can be traced and that we can stand over on any world market and I do not agree with the MII assertion that our price is above the EU average. The EU average price that the MII is producing is from lower grade countries in terms of traceability and production. We have the highest quality animals in this country and yet our market is being depressed.

I do not accept their point that the Meat Industry Ireland did not encourage farmers to produce bull beef. I attended open meetings, meetings with factories and meetings with Teagasc where farmers, especially dairy farmers, were encouraged to produce bull beef, that this was where it was going to be. We are producing 100,000 more animals this year and, suddenly, we cannot kill them. Where is the industry going?

We constantly hear about new markets being opened. Where has the MII, as an organisation, gone to try to ensure when these markets have been opened up that our product is being sold into it? Has MII spent money to go to ensure that these markets are being pursued when the are being reopened? It is a long way to go to get something to Japan, but I was in Japan recently and I am aware that what is part of the fifth quarter is now going into Japan at a price nearly 1,000 times better than what we were getting two months ago in this country for it.

Returning to where farmers need advice, when the dairy sector was making changes in the way farmers would be paid and the product they wanted produced, farmers were given notice. Suddenly, at two or three months' notice, farmers are told anything over 16 months old is not wanted and anything over 400 kg is not wanted. That is not acceptable. The MII has got to work in co-operation with the primary producer, which is the farmer. It looks as if the MII is trying to soften the blow to the farmers in relation to post-2015, when quotas come into effect, there will be many more Friesian-type animals in the country and, suddenly, the MII will not need a bull beef sector. It will come along and take cattle at whatever price it can source them because there will not be a demand and there will not be the same quality in the country.

How many, not counting farmers, are working directly in the meat sector in this country? What percentage of the kill in Northern Ireland is controlled by factories from the South? I refer to the big players such as AIBP, Kepak and Dawn Meats. Perhaps MII could give me those figures.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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Having listened to the two different presentations today from the group earlier on and this group, it is amazing that they paint such a different picture. If a visitor was here an hour and a half ago, he or she would have heard of an sector on its knees and in crisis. In the MII presentation, Mr. Healy paints a picture of an excellent performance over the past five years, with improved efficiency, improved price and improved markets - entering 75 countries - compared to the position in 2005. If one talks to producers, however, that is not really the case.

Without primary producers, the MII has nothing. The primary producers are in serious difficulty, and not for the first time. This is history repeating itself. Every two-to-three years, this issue arises and there is no certainty. The big issue is no certainty.

Without wishing to rehash the point, the 16 month old bull beef issue has been rehashed repeatedly here. There is no denying, although the MII has said otherwise, that primary producers were encouraged down that road by the MII and others, and it is an unfair practice to change the goalposts now in midstream.

As I stated earlier, there is a short-term problem at present. First, there is the age limit where farmers cannot get their animals killed. Over the weekend, I spoke to a farmer who had 100 bulls three weeks over age in his shed and nobody will even talk to him, let alone kill them. What is he going to do with those? Every day they are a day older and they will be of less value to anybody. It is costing money.

Mr. Healy made, I suppose, the fair point that prices have improved over the past four or five years, but the costs of production have also risen, probably by much more, which creates another difficulty.

I ask them to comment on a specific point made in an earlier presentation on access to the CMS AIMs within the factories. Who has access to that? Is it confined to MII management? Is it confined to veterinaries? The perception is that persons have access to that system who should not have access to it, they are able to manipulate the system and able to know who has what, for example, that farmer X or Y should have Z amount of cattle coming next week or the following week. The perception is that one is able to control the numbers coming in on a week-to-week basis.

I was also disappointed to hear in the MII presentation that there has been no promotion of beef by retailers since Christmas. That, to me, was disappointing. The MII is feeding into the retailers around Europe and, thankfully, from that point of view, there are now more of them. Why was there no promotion? One would imagine that in times of difficulty more promotion would be required to create more markets for that. It is something that needs to be investigated.

Post 2015, when milk quotas are abolished, there will be more dairy-type beef animals coming into the system and we will need more markets for them. What is the future for those? Even though Mr. Healy would say that the future is rosy, that would not be the case. If we continue as we are, we will go down the same road every couple of years. We might have two good years followed by three bad years and then cycle will repeat itself. Every time we have two or three bad years, one will lose an increasing number of producers, which has a knock-on effect for the sector.

There is Food Harvest 2020 targets to achieve. At one stage, these seemed realistic but at this stage one would have to question whether or not those targets are achievable. Some 30,000 is the number being killed at present. Once we go over that 30,000 mark, there seems to be a problem. Our target in Food Harvest 2020 is 40,000. What if the position is that once we hit the 31,000 mark, all of a sudden there will be a drop in price and then we will be in trouble? That seems to be how the trend is developing.

A question that arises from time to time is the feedlot issue. Does the industry support feedlots or does it have feedlots? How many feedlots does it have or what type of numbers would it have in those feedlots at any given time? If there is a number of feedlots, and Mr. Healy may correct me if I am wrong, the perception is the feedlots would have a substantial number of animals coming in at any one time and one could choose from them to depress the price of the market. Is that the case? If so, it is something that needs regulation.

Finally, the MII might have attended as part of the process when the committee was dealing with grocery related matters last year.

Would the organisation favour a round-table discussion at this committee on the regulation and future of the industry and all matters relating to that?

Andrew Doyle (Wicklow, Fine Gael)
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I apologise for having had to step out and I thank Deputy Deering for having taken the chair. If the question I am about to ask has been addressed, I ask the delegates to forgive me for posing it. We are told that the genesis of this problem stemmed from a change in the specification for young bull beef. Page 20 of the delegates' submission states that in respect of young bulls, the UK retail requirement is for less than 16 month only and that there is limited opportunity for some older young bulls in continental markets - processor specific. I note from the statistics provided that, in 2013, 247,000 tonnes of beef were exported to the UK, 211,000 tonnes were exported to the remainder of continental Europe and 8,000 tonnes were exported to international markets - Russia, Egypt and others. In respect of that 247,000 tonnes of beef, will the delegates outline what percentage of it was young bull beef under 16 months and what percentages of it were steers and heifers? I would have thought that, traditionally, the market in the UK for beef exports was not for not young bulls, as I would have associated that market as being in continental Europe, be they animals under 18 months or whatever. There has been a difficulty, as was outlined in previous presentations earlier, about the Derrypatrick project, in which all players were supposed to have been involved, targeting, detailing and trailing a system in respect of 18-month old beef of 400 kg weight. That seemed to be the clear message that was being given by everybody. The delegates might also answer that question. I will return to Mr. Healy.

Mr. Ciaran Fitzgerald:

If I might comment briefly-----

Andrew Doyle (Wicklow, Fine Gael)
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Yes, Mr. Fitzgerald.

Mr. Ciaran Fitzgerald:

In broad terms, there is a major dispute as to where we are, never mind how we got here. In terms of our presentation of where the industry is, the value of it and the progress that has been made, those are facts. We have not embellished anything. The fact that there has been a sustained 40% increase in cattle prices has been a major and positive achievement in the middle of a recession when the Irish economy has lost €30 billion of GDP, Irish consumers have seen their spending fall by €15 billion and €1.5 billion a year extra has been delivered to beef farmers.

With regard to signalling by the industry and what that has been about for the past five, six and ten years, particularly with regard to young bull beef, it has been very specific. We worked hard within Food Harvest 2020 segment, first, to make sure that there was a beef story in it because there seemed to be a large part of the agri-community who did not want a beef story, and, second, to make sure that very explicit statements were made by the implementation group about what the market requirements were, particularly around bull beef. Very strong statements, in black and white, were made in 2010 and before that about what the specifications were for young bull beef - that they were for 16 months and younger and that if anybody was doing something more than that and wanted to talk to particular processors that they should do so.

In terms of where we are and how we got here, we would disagree with a view that would point out, first, that we are in a bad place and that the reason we are is that the industry did not communicate because the industry has strongly communicated, and, second, that we are in quite a strong position. We are in a situation where 99% of all our beef goes to markets in Europe. The industry faced a major challenge ten years ago. At the time of intervention and export refunds the challenge put to this industry was to become market-driven and not support-led. We now have major access to markets. Deputies raised the issue of other markets. We would love to get certain products into the Japanese market and they would enhance the return and that enhancement of the return would be passed back through the system. Access to the US and Canada is imminent and all such openings of market access are very important to us, both reputationally and in giving us a spread of markets.

This industry has delivered in terms of what it has invested in capturing markets. On some of the issues such as contracts that have been addressed, to return to Food Harvest 2020, an issue for the implementation group at that time was that the industry should have been mandated, never mind encouraged, to increase contracts, particularly with winter finishers. The industry made a commitment to that group to do so and has increased the amount of beef under contract. That was done on the basis that if people were going to commit to extra costs that they would be given a commitment in terms of market outlets. Everything that can be done in order to facilitate the supply side here has been done. This industry is hugely dependent on the decision of individual farmers to continue in the beef business. We know that is a very competitive situation and that there are structural and other cost issues, as have been mentioned, but the industry is not foolish in that context. We have neither signalled a product that the market does not want nor have we asked producers to get involved in production systems that do not meet the market specification. We would have not have a beef industry in the future if we did that.

Mr. Cormac Healy:

As we have said on a number of occasions regarding the communication on the specification in respect of beef under 16 months and when it was communicated, a point to which Deputy Heydon specifically referred, it goes back to Food Harvest 2020 because at that time and at the time of the subsequent beef activation group there was a largely farmer-driven increase in bull production conversion in Ireland and people were trying out the system because of the efficiencies in terms of weight gain and growth rate that it delivered. The communication was made as far back as then. On numerous occasions companies in their engagement at meetings with Teagasc etc. discussed these issues and it was constantly highlighted from the industry's perspective that steer and heifer production was what the industry and Irish beef exports have been built on and that they will remain the key driver of development in the future. That is what the European marketplace is seeking from Ireland. Bull beef is produced on the Continent. Therefore, they have that and they are looking for something different.

I would refer to one market, the German market, which we lost many years ago at the dawning of the first BSE crisis and while significant progress has been made by us in that market, ten to 15 years ago we were out of that market overnight, as many markets had closed at that stage. The Argentinian and Uruguayan markets took up the mantle and produced steer and heifer beef and they had a stranglehold on that market for many years. Thankfully, in more recent years, because of the fall-off in exports from Argentinian and less product coming through from Uruguay, the Irish industry has successfully re-established itself as an exporter of steer and heifer beef. It is important that we say that and put that message out, but it has been said already.

We are glancing over, to some extent, what is the driver of difficulties at the moment, and in so far as there are difficulties it is a very difficult market. Reference was made by Deputy Deering to the lack of promotional activity. That is one of the issues in that because of relativities of beef price versus some of the other meat proteins, there has not been any significant level of promotional activity that would start to drive volume and move product through the system. There are other issues affecting the market. The fact that we had a reasonably mild January and February is not good for beef sales. Mild, wet weather does not help sell beef to consumers. It has not driven any sales over the last number of months. That and a number of other issues are putting a considerable pressure on the industry in terms of moving product. The issue that will be of most concern to a processing company - at the end of the day we take cattle, break them up, process them into cuts and sell them - is a building stock level in vac-pac chilled products and there not being movement in those products at the end of the week. That is a factor and it is a driver. In such circumstances, animals that are at the extremes of, or outside, specifications will be the ones that will suffer most. That is the reality of it. Why would somebody who was producing an animal that is in specification and can possibly find more market outlets be penalised in that regard?

In terms of having cattle killed, when we met the IFA leadership we asked for names to be put forward. Ten days ago we gave a commitment to the Minister for Agriculture, Food and the Marine that any individual issue brought to the attention of a meat plant or Meat Industry Ireland would be pursued. The reality is, however, that the young bull kill has increased from 4,000 per week to 5,500 per week and, over the last four weeks, to 6,500 per week on average. Last week 18% more young bulls were killed compared to the same week last year.

Pat O'Neill (Fine Gael)
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The figure for steers dropped.

Mr. Cormac Healy:

Steers have tended back a small amount but they were up last week. Our overall kill is up and while our overall young bull kill is down by approximately 4% it was down considerably more than that several weeks ago. Our overall slaughtering figure is up by 7%. The industry is working to manage the situation. It is a balancing act between a difficult market and lower demand but the industry has increased the kill of young bulls to deal with the backlog, in line with the commitments it gave. The issue of price was raised. I recognise that price is important to an individual producer who is about to sell cattle but we must also consider the sector in an overall context. The Department of Agriculture, Fisheries and Food has reported that between 1 January and today prices fell by between 5 cent and 7 cent across the full mix of steers and heifers. The Chairman referred to contracts in feedlots. I do not have specific numbers but the industry has been encouraged to develop contracts for the winter finishing part of the business because we need year round supplies.

I am not familiar with the specific case of similar Irish and English cuts being sold for the same price but it tells me little in an overall sense. I cannot base an analysis on a photograph of two cuts of meat. The industry deserves more than that kind of analysis. It does not suggest the price at which the product was purchased. We are selling 50% of the animals processed in Ireland, by weight, to the UK market. There will always be a premium for UK red tractor domestic beef compared to imported beef but we are at the higher end of price levels in Europe. It is perhaps regrettable that the market is not continually climbing but I do not know of any other agricultural commodity that does not experience ups and downs over the long term.

Andrew Doyle (Wicklow, Fine Gael)
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I ask Mr. Healy to address my question on the UK.

Mr. Cormac Healy:

I do not know the answer. The Chairman is correct that the UK market is not ideal for bull beef. There is limited production of bull beef in the UK. Steers and heifers are the main focus and the specification at retail level is younger than 16 months. I do not know the breakdown of exports across the categories of animals but the UK market is not targeted for young bull beef exports.

Andrew Doyle (Wicklow, Fine Gael)
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Is it true to say that it is the only market with a specification of 16 months?

Mr. Cormac Healy:

It has the prime specification of 16 months. Other markets may take older beef, depending on their customer profiles. The reality is that producers have for many years successfully raised young bulls to ages above 16 months in co-operation with individual processors. The opportunities in this regard are limited, however, and the market can only be developed by producers working with processors.

Andrew Doyle (Wicklow, Fine Gael)
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The genesis of the problem appears to be that the initial price reduction was because the specification had changed for young bulls being processed in the UK. There was a demand for animals aged no more 16 months at 380 kg. It compromised a limited part of that market. The Derrypatrick project was built around an 18 month system so that we could produce young bulls for processing at home, as opposed to exporting them live at a younger age to more lucrative markets. It is puzzling that the 16 months specification has had such a tumultuous effect on the rest of the market.

Mr. Ciaran Fitzgerald:

UK deadweight prices have fallen significantly, by 35 pence to 40 pence per kilogram, since last October. The UK market did not get the lift anticipated prior to Christmas and it has been quite weak in the relevant categories. Bull prices have fallen dramatically. In terms of the push-pull effect, nobody is trying to say there was any particular change in the marketing mix. The industry did not draw up a specification with Derrypatrick for an 18 month animal. We have been insistent with the Food Harvest 2020 implementation group that the specification for young bulls should be 16 months or younger and if producers want to sell older product they have to work with their processors at the time when they get the calves. We are more concerned than most about adding value and creating jobs in an Irish economy that has an unemployment rate of 15%. We committed to extending into the dairy element in terms of adding value to as much output as possible but we have been clear about the market specifications.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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I asked a number of questions but as they may not have been clear, I will ask them again. What connections, if any, do Meat Industry Ireland members have with factories in Northern Ireland, Britain or further afield in Europe? Do they have shareholders who also own shares in factories in other jurisdictions?

In regard to specifications, does a group of humans sit around a table to agree on specifications? It is informative that Mr. Fitzgerald did not agree with the Derrypatrick specifications. I am trying to understand the process. Who contributes to the development of specifications and with whom are they shared? Are they time limited? I noted the impressive increase in the number of retailers from 27 to more than 75, with more beef coming from Ireland over a 30 year period than from any other country. What role does the industry play in negotiating with retailers to bring us to this happy state? I also ask the witnesses to outline its relationship with Bord Bia. Would they accept there is a greater need for regulation in the industry, particularly in terms of the processes used to set factory gate prices?

Éamon Ó Cuív (Galway West, Fianna Fail)
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Everybody except MII seems to think there is a change in the situation in regard to North-South trading of cattle. The ICMSA stated:

[..]from 1 April 2014, Northern Ireland intends to class cattle imported from this State as ‘out of spec’ cattle. This is totally unacceptable, absolutely against the concept of a single market, [with which I concur] and is yet another example of the growing concentration of slaughter capacity both north, south and in the UK.

ICOS has raised these barriers to the free trade of live cattle on numerous occasions at National and EU level only to be informed that the EU requirement on the meat labelling regulation was to blame. This assertion is not accurate as the retailers can easily label beef meat to comply with these regulations when it suits them.

Mr. Cormac Healy:

In response to Deputy Colreavy's questions, companies here have an involvement with or own processing facilities in Northern Ireland, England and Scotland. That is quite clear. The AIBP group, the Dawn group and the Kepak group are involved in various parts of Britain as well as in Ireland. Equally, there are companies-----

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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Do they have any companies in Europe?

Mr. Cormac Healy:

There are companies in Northern Ireland, which have connections with and have invested in processing facilities here. To a lesser extent, Irish companies have some processing facilities in continental Europe, although it limited enough.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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Is there a co-ordinating body looking at the European market and making decisions based on-----

Mr. Cormac Healy:

I am not aware of one. In terms of specifications and who makes them, a specification is something a customer, whether a retailer, a food service operator or a wholesaler, will have. It will deal with matters such as the type of animals it wants it coming from, what age, what weight and what kind of cut size. In some cases, it may be cut size. It will also deal with many other things in terms of supply arrangements, whether it is weekly or twice weekly, the type of mix of cuts of it is willing to take and what they do during promotions. They are predominantly set out by the meat buyers and the meat buying team of that customer. They vary to some extent among customers. That is my understanding of where they are established. It is by the meat buyer and the meat buying team of the customer. They outline these specifications. The Deputy must understand it may not only be an Irish supplier delivering product to the customer. Depending on the customer, it could be a supplier from Italy, Spain, Poland, France or elsewhere. The process commences with the customer.

In terms of the process of listing, it is feet on the street ultimately. As the Deputy will be aware, Bord Bia is the marketing agency. It has a number of offices throughout Europe with responsibility for various markets. They would constantly survey the market, establish where the key purchasers of beef are, etc. and put Irish companies in contact with them. Equally, Irish companies will have offices on the ground. It is something that is built up over a long number of years. Just because one knows there is a significant buyer there does not mean one will get the business with the buyer. One makes one's pitch and tries to present what one can supply, etc. If things go well, one is listed and delivers a particular type of product over a particular period of time. That is how it builds up over time. It is about knowledge of the market.

The Deputy spoke about the regulation of price. I do not believe there is a requirement for regulation. There is no regulation at other points along the chain. I go back to the point of delivery which the industry has. When one asks a question like that, it would suggest there is not delivery on price or that there is a real problem. We are not belittling or under-stating the issues there at the moment. They are market-driven but, overall, there has been price delivery. What industry has achieved in sales has been returned into a producer price and a cattle price on the ground.

I can only comment on some of Deputy Ó Cuív's other remarks because, ultimately, we are not here speaking on behalf of Northern Irish industry. There are still significant live exports to Northern Ireland, according to figures I have seen. The Deputy rightly pointed out that there is a reluctance on the part of British or Irish owned operations in England to take Irish cattle.

I acknowledge he said he will check on the labelling regulations. However, they are in place and my clear understanding of them is that an animal, for example, born and reared in Ireland and slaughtered in Northern Ireland is not labelled "Origin: Ireland". If it is born, reared and slaughtered in the Republic, we can label it "Origin: Ireland". If it is slaughtered in Northern Ireland, it has to be labelled "Born and reared in Ireland. Slaughtered in the UK". That is my understanding of the labelling.

Andrew Doyle (Wicklow, Fine Gael)
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Does that apply to Polish beef as well?

Mr. Cormac Healy:

That applies to Polish, French, Italian or German beef. Recently a regulation was passed by Europe, which has extended some of the labelling rules to sheep, poultry and pig meat.

Éamon Ó Cuív (Galway West, Fianna Fail)
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What about milk?

Mr. Cormac Healy:

No. Legislation is being looked at in Brussels in respect of the labelling of dairy products and dairy products as ingredients but they also require a specification regarding which member state the animal is slaughtered in.

I do not have a figure for the Polish beef but I am sure it is available through the CSO or Bord Bia. If it is processed here, it must be processed in an establishment a approved by the Department or under the control of local authorities. Labelling, etc., must be in line with EU requirements and the checks on that are carried out either by the FSAI or the Department.

Andrew Doyle (Wicklow, Fine Gael)
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Deputy Deering asked about data and AIM.

Mr. Cormac Healy:

I have seen reference to this. My understanding of that is that the checks against the AIM system in the plant relate to verification of identification and so on but, in the past, for example, they were used to check eligibility criteria of the Russian market. They are undertaken by an agricultural officer in the plant.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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Only.

Mr. Cormac Healy:

Yes. That is my understanding of how that operates.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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Who oversees that?

Mr. Cormac Healy:

It is a while since I have been involved in that level of detail but when animals come in, they must under EU legislation be read and recorded into the plant by the food business operator to be presented then for ante mortem inspection. In general, they come with their passport or on permit. If there is a passport, it is scanned into our system and that information is passed across to the AIM system. We get an answer back from the system that will set out effectively a sign off or the AO that will pass on to the veterinarian who will do the ante mortem. There may be confirmation of date of birth and sex. One of the checks, for example, related to Russian eligibility. That is my understanding of how it runs but I am sure the Department will clarify that.

Andrew Doyle (Wicklow, Fine Gael)
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The concern was that once the factory had access to a herdowner's AIM details on an animal that had presented, it could go back further and establish the inventory of the remaining animals in the herd and that data were not protected.

Mr. Cormac Healy:

This can be clarified but my understanding is the process is that the details of the animals are scanned into our system as they come in. They are sent electronically to the AIM system, which is live, and it does the relevant checks. One of the checks is whether it is okay to slaughter and whether the person who has brought them in is the current owner. All these checks are done and that information comes back automatically to our system. That is the connection point.

Andrew Doyle (Wicklow, Fine Gael)
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I thank the witnesses for attending and I also thank members. Everybody agrees the beef industry is important. It will remain our largest sectoral export if it is taken care of. It would be a shame after all the investment in recent years in quality, education and genomics and having come through numerous difficult times caused by scandals to re-establish markets, that this could be undermined by a fear among those who are willing to invest in production that they will not be guaranteed a reasonable margin. It is worrying to hear that the Derrypatrick project was promoted only by Teagasc. I would have hoped that it would have been promoted by Teagasc in conjunction with farmers, the meat industry and Bord Bia. It is essential if we are to grow this sector and put it on a footing where people know that if they invest and make a financial commitment and young people know they can have a career and invest in this as a business and put an effort in, they will be rewarded. It is regrettable that a project such as Derrypatrick did not have all stakeholders involved in it from the beginning.

The committee has work to do on this issue and we will consider it. I thank everyone for attending and discussing this issue in one hearing. It has been a long meeting. I thank the witnesses for waiting because the other four contributors took longer than anticipated but it was worthwhile. It was important to thrash out the first hearing in order that we can move on with our deliberations.

I remind members that a meeting of the select committee will be held on Thursday morning.