Andrew Doyle (Wicklow, Fine Gael)
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I apologise to the witnesses for the brief interlude. I welcome Mr. Aidan Cotter, chief executive officer of Bord Bia; Mr. Jim O'Toole, director of Bord Bia's meat and livestock division; Mr. Joe Burke, sector manager for beef and livestock. I welcome Professor Gerry Boyle, chief executive officer of Teagasc and Mr. Pearse Kelly, head of dry stock knowledge transfer. I welcome Mr. Paddy Gernon from the Irish Cattle Exporters Association. I thank them for their attendance to discuss the current crisis affecting bull beef producers.
On the matter of privilege I advise the witnesses that, by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this 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. They are directed that only evidence connected with the subject matter of these proceedings is to be given. 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 persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing ruling of the Chair to the effect that they should not comment on, criticise or make charges against a person outside the Houses or any official by name or in such a way as to make him or her identifiable.
I invite Mr. Aidan Cotter to make the first presentation.

Mr. Aidan Cotter:

I thank the committee for the invitation to discuss the performance of the Irish beef and livestock sector and the current market environment. I am joined by my colleagues, Mr. Jim O'Toole, director of our meat and livestock division and Mr. Joe Burke, sector manager for beef and livestock.

With the agreement of the committee I will focus in my statement on the recent export performance of the Irish beef and livestock sector and I hope to address some of the issues being experienced as a result of the current more difficult market conditions.

The value of Irish food and drink exports reached nearly €10 billion in 2013. Beef exports accounted for €2.1 billion, representing a 10% increase in value compared with the previous year, following a rise of 5% in output and a similar increase in prices. Bord Bia's marketing strategy for Irish beef is one of repositioning and differentiation by targeting the best customers across Europe. In recent years a growing proportion of Ireland's exports have been destined for higher value retail and food service channels. Irish beef is listed with more than 75 multiple retail chains across EU markets, a higher number than beef from any other origin. Since 2007 this strategy has helped to increase the Irish R3 steer prices as a percentage of the European average, from 92% to 99% to date in 2014. For the year 2013 the Irish price was equivalent to 104% of the EU average price.

Finished cattle supplies in Ireland increased by 7% in 2013 and a similar increase in availability is likely to arise this year. This is a reflection of higher calf registrations in 2012 and no live exports in that year. In recent times beef production across Europe has declined consecutively each year. The volume produced by the EU was estimated to have fallen by 2.2% in 2013 which followed a 4.8% drop in 2012. However, it is envisaged that EU beef availability will recover this year to 2012 levels on account of higher cattle output in several member states. On average, finished cattle prices in Ireland recorded a 5.5% increase in 2013 but this performance was in the main the result of the strong uplift during the first half of last year. After reaching record high levels in June, Irish beef producer prices declined steadily until October. Since then, the average price being paid for steers has remained relatively static.

In general across continental Europe, finished cattle prices in the major beef producing countries deteriorated steadily throughout 2013. As a result, the Irish steer price exceeded the equivalent young bull prices in France, Germany, Spain and even in Italy, for most of the year. Most recently, the weighted average R3 young bull price for continental Europe has been more than 20 cent a kilo below the price in the same period last year.

By contrast, cattle prices in the UK performed strongly throughout 2013, increasing by an average of 7.5%. As a result, British beef producers received the highest prices in the EU for their finished animals. However, since December, UK steer prices have declined by more than 20 cent a kilo as a result of weaker consumer demand combined with some recovery in beef supplies.

Overall consumption of beef in the EU is estimated to have fallen by 2.1% last year, following similar declines in previous years. Sales were impacted by the challenging economic situation in general. Beef consumption decreased most significantly in southern Europe. The volumes of beef sold at retail in France, Italy and Spain each recorded declines of between 3.7% and 4% during 2013. Even in the more affluent UK market there was a reduction of 2.9% in the volume of beef sold by retailers.

Over recent months demand from processors has been strongly focused on prime cattle which meet the desired specifications for the UK retail sector and other high value customers. Other cattle such as young bulls aged over 16 months and poorly finished stock are selling for significantly lower prices. As shown earlier, the United Kingdom has effectively become the highest priced beef market in the EU. The prices achieved are well ahead of equivalent beef prices across most of the continental EU markets.

The UK market accounted for 250,000 tonnes, or 53%, of Irish beef exports in 2013. Most of that volume was purchased by retail customers, including Tesco, Asda and Sainsbury's. These supermarket groups have rigorous purchasing specifications. These specifications are the same for both Irish and UK suppliers and, contrary to recent reports, have not changed in recent years.
Typically, retail specifications require that suppliers deliver beef from steers or heifers of less than 30 months of age, or young bulls of less than 16 months of age, produced by quality assured farms, of carcass weights between 280 kg and 380 kg, having a carcass conformation of "O=" or better, and a fat class of between “2+” and “4=” on the European classification scale. Cattle which do not meet these parameters, such as young bulls of more than 16 months of age, are less valuable to meat plants. When such carcasses are deboned, processors have to sell the resulting cuts into other market segments, at a lower price.
Around continental Europe, recent producer prices for R3 young bulls have been averaging in the region of €3.70 per kilogram, excluding VAT. Given this background, Bord Bia endeavours, together with Irish exporters, through successive marketing campaigns, to persuade customers of the positive attributes of Irish beef in order to gain a premium over domestic product. As already mentioned, the portfolio of EU retail and premium food service customers buying Irish beef has grown substantially in recent years. Feedback from our customer meetings is that they put a higher value on our prime, grass-based, steer beef. Young bull beef is seen as more of a commodity and therefore it tends to sell for a lower price, since it is competing directly with bull beef from France, Germany, Poland and so on.
Bord Bia communicates regularly with primary producers at farmer meetings, through quality assurance newsletters, agricultural media articles and our exhibits at the national ploughing championships. Our advice to beef farmers has been consistent and in line with what our most valuable customers demand. Market requirements regarding young bull production have been clearly portrayed, as demonstrated by an exhibit from 2009, which I will hand out afterwards. Another area of focus has been on growing the membership of Bord Bia’s beef and lamb quality assurance scheme, which now includes some 43,000 producers who collectively account for over 87% of our national beef production.
The popularity of young bull production has already declined. In 2013, there was a 10% drop in young bull slaughterings, coupled with a 13% increase in steer throughput. While there will continue to be markets for some young bulls, these need to be produced to a tight specification in terms of age, weight and classification. Producers intending to finish young bulls need to consult well in advance with their intended meat plant, to ensure they meet customer requirements. Along with the finished animals which are sold to Irish meat companies for processing, Ireland also exports a significant number of live cattle each year. Live exports represent an important source of competition, as well as a valuable market for certain classes of animals, including male calves from the dairy herd and high quality suckler-bred weanlings. Cattle exports increased by more than 30% in 2013, and reached almost 210,000 head, with an overall value of €157 million. The principal drivers of this increase were that Irish calf prices became more competitive than previous years and that exports to Libya resumed for the first time since 1996.
Live exports have increased by a further 7% to date this year. Exports of calves have gotten off to a strong start, with weekly shipments to the Netherlands, Belgium and Spain all ahead of 2013 levels. Weanling exports are also performing well, with some recovery in traditional markets in Italy and Spain, as well as good prospects for further consignments to north Africa. The other major category of live cattle exports relates to the UK market, and focuses mainly on forward store animals and finished cattle. Exports to Northern Ireland declined by 13% in 2013, to almost 55,000 head, while just over 11,000 Irish cattle were exported to Britain. This slowdown collectively in exports to the UK was in spite of a widening in the price differential between Irish cattle and their counterparts in Northern Ireland and Britain. The average price paid for R3 grade steers in Northern Ireland was 6.5% higher last year than in the South, compared to having been 4% higher the previous year. Similarly, the differential between the prices paid in Ireland and Britain increased from 10% to 12%. Historically, the higher beef prices might have made Irish store cattle more attractive to UK buyers. However, in practice the prospect of selling finished cattle which were born in the Republic of Ireland to the processing companies in the UK has become less viable in recent times. This is largely a consequence of the fact that the beef from these animals does not meet the buying specifications of the major supermarket chains in that market, which is for either British beef - born, reared and slaughtered in UK - or else Irish beef, which is born, reared and slaughtered in the Republic of Ireland. Bord Bia has been in close discussion with all of the multiple retailers about the possibility of stocking beef from Irish-born animals, which had been finished and slaughtered in the UK. The response in each case was uniform and unequivocal that they are unwilling to change from their current supply arrangement.
By way of background and clarification, on this issue, EU law states that in the case of beef, the national origin of the product must be identified to consumers. The law specifies that each stage of the production process must be identified, that is, specifically, where the animal was born, where it was reared, and where it was slaughtered. In the event that all three stages take place in the same member state, then more straight-forward wording can be used to communicate the origin, namely, “Irish beef” or “British beef”. For example, the beef specification of one of the leading UK retailers states the following:

Cattle from the UK (England, Scotland, Wales and Northern Ireland) or Ireland may only be used.
British - Cattle must have been born and raised exclusively in England, Wales, Scotland or Northern Ireland and have been slaughtered in an abattoir located in England, Wales, Scotland or Northern Ireland. It is permissible to have a combination of the above e.g. born in England and slaughtered in Wales etc.
Irish - Cattle must have been born and reared exclusively in the Republic of Ireland and slaughtered in an abattoir located in the Republic of Ireland.

Andrew Doyle (Wicklow, Fine Gael)
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Thank you Mr. Cotter. I will now go straight to Professor Boyle.

Professor Gerry Boyle:

Thank you Chairman. I thank you and the committee for the invitation to address the topic of the current difficulties in the beef sector, specifically relating to the production of bull beef. I am joined by Mr. Pearse Kelly, who is head of our drystock knowledge transfer department. He works very closely with our advisory and research colleagues, and with farmers of course.

The first point I would like to make is to clarify Teagasc's role on support for the farm sector and farm enterprises. Our remit is provide and information for decision making, largely in respect of the technical challenges associated with production systems on farms. Farmers ultimately make their own choices based on their own resources, knowledge of markets and so on.

My presentation includes a table that sets out the relative prices of young bulls and steers of different qualities since 2008. It is very evident from that chart, which goes to the crux of the challenges facing the sector right now, that between 2008 and 2012 there was a clear premium on the production of young bulls, defined here as bulls under 24 months of age, as well as steers.

This was the price signal that farmers would have followed in recent years in respect of their production choices, and no doubt it had a major influence in their decision to produce bulls. As members will see from the slide, the average price differential for 2013 and especially in the year to date has seen a substantial reversal, which is quite extraordinary. There has been a slippage also in the steer prices, but they are still back at their 2012 levels. The really surprising feature, as we are all aware, is what is effectively a price penalty for the production of bulls.
I wish to refer briefly to the fundamental efficiency of bull beef production versus steers. I will say a little about the research Teagasc is doing and has done in regard to bull beef and also from where the motivation for that research comes. Finally, I will conclude with the advice our advisers on the ground are giving and have given to farmers in relation to the production of bull beef.
I mentioned the price differential in the past year or so which has turned against bulls. Members will see in one of the slides I have reproduced what we called a bull beef budget. This is produced by Teagasc around the National Ploughing Championship every year just to give farmers some guidance as to the prices required in the marketplace to give them a reasonable margin. When we produced that guide last September, the price required to break even was €4.64 per kg, whereas the current price is €3.70 per kg, so there is a substantial difference of almost €1. On a per head basis, one can see the catastrophic implications for margins.
Why would farmers consider producing bull beef at all? Clearly, the price differential is very important and there was a premium for several years up until recently. The most important aspect is the simple fact that I have set out in a couple of pages, which is that there is a major efficiency advantage from the production of bulls. Bulls are more efficient meat producers, providing in the range of 15% to 20% additional meat relative to steers or heifers. They have a better carcass confirmation in terms of meat yield and lower fat content and, of course, this is driven by the natural male hormone testosterone. That bulls can be slaughtered at a young age - 13 to 18 months versus 22 to 26 months for steers or heifers - is a significant advantage and means that much greater throughput is possible on farms where for the production per hectare can be increased substantially. There are two advantages of which farmers have become very conscious in recent years. There is the advantage on a per head basis and the advantage in terms of the amount of output that can be produced per hectare.
Mr. Aidan Cotter referred earlier to the issue of sustainability. Bulls have a lower carbon footprint because they are slaughtered earlier which is an increasingly important consideration. Of course, there are significant drawbacks. There can be adverse behavioural and safety issues in the production of bulls. Lower age animals, in particular those under the age of 16 months, require significant and higher amounts of concentrate feed input, and getting adequate fat at the younger age and with lighter carcases is a challenge. There can be the perception at least of quality issues with older bulls in taste terms but also in terms of market specification in regard to the size of cuts and so on. As Mr. Aidan Cotter has said, the UK market, which is hugely important to us being 50% of our market, is primarily a market that values steer and heifer beef. Therefore, there is an inherent challenge in exporting bull beef into that market.
The graph shows the basic reality of the efficiency of bull beef production whether in a suckler system or in a dairy beef system. Clearly, bulls attain finish weights at a much younger age than the steer. That applies both to suckler beef and dairy beef systems. From the farmers' point of view, Teagasc advises the farmer on the technical challenges in regard to the different systems of production. The farmer's concern is what system is best for him. Clearly, there are two overriding considerations: what the market requires and the cost of production in that system. If the anticipated price of bulls and steers is equal and if there is a market for the bull output, the efficiency advantage of bulls is a very significant consideration in the decision of some farmers. The international evidence is presented in summary form which again supports very strongly the technical advantages that the production of bulls have over steers.
I wish to mention briefly the work Teagasc has been doing on the production of bull beef. The majority of our research is concerned with the production of steer and heifer beef, but we have a number of projects under way in regard to bull beef, and the rationale for being engaged in this work was to provide basic information to farmers to help them decide on the systems of production that would be most advantageous from a cost and competitiveness point of view, assuming always that the market was in place for their product. In 2010, we commenced a major project at Johnstown Castle on the production of dairy bull beef. That was motivated largely by the huge increase in dairy bulls in anticipation of the abolition of the dairy quota. For example, in 2008 the number of dairy bull calves produced was 320,000. In 2012, the number had increased to 380,000. As the quota is abolished, we anticipate that significantly more of these animals will be produced. Naturally, farmers are concerned to find a good system to produce these animals onwards.
In recent years, as we have undertaken research projects, we have also tried to have a parallel commercial farm development. Linked in with the dairy bull beef project at Johnstown Castle we have had associated bull beef research on four commercial demonstration farms. We have had long-term research on suckler beef production and on sensory analysis where we compare the eating quality of bulls versus steers and heifers. This is being conducted primarily at the Teagasc centre in Grange, but also at our site at Ashtown for the sensory analysis. In recent years we have established a major project at the Teagasc centre in Grange on suckler beef production, known as the Derrypatrick herd.
The Chairman and members will be aware of the very successful Teagasc-Irish Farmers' Journalbetter farm beef programme, based on commercial farms. We have tried to match the work conducted in a research context and all the protocols attached to that with parallel activity on commercial farms.

I will now summarise the main findings from the different research projects, starting with dairy bull beef. We must remember the objective of the programme. Farmers who may have wanted to get into bull beef were asking us about the economics of producing bulls of different ages. We put in the 24 month dairy beef and steer beef, which is the control. We compared 16 month and 19 month bull beef. One can see that on the cost of production per kilo of dead weight, 19 month dairy bull beef emerges as the most cost-effective or competitive of the systems. One can see that the 16 month bull beef has a substantially higher cost of production. Essentially, the reason the 19 month bull beef emerges as the most cost-effective is because at the lower age, too much meal is being consumed and the steer beef has a second winter. There is another point that is not obvious from these data, but I referred to it a few minutes ago. The other big advantage of killing the animals young at 19 months is that the throughput on the farm is increased significantly so there can be much higher production per acre. That is the gist of the principal research findings on dairy beef from Johnstown Castle.
Turning to the next slide, we had a parallel project on commercial farms. There were only four farms involved here. Initially, in 2010, these farms were mainly finishing steers but they switched to bull production over that period. One can see the increase both in output per hectare and in gross margin per hectare. Most of these farms are producing bulls between 16 and 20 months, and one farm was producing bulls in or around 16 months, but this is the average performance. Therefore, a significant lift is evident up to 2013 both in gross margin, which admittedly is a limited indicator of profit, and the level of output. Basically, the research was indicating that the dairy bull in or around 18 or 19 months is the optimum from a cost effectiveness viewpoint. That was then mirrored in the commercial farming context, certainly up to 2013.
I will now move to the suckler bull beef research which has been ongoing at Grange for a long period. Essentially, the same key messages emerge with regard to the optimum system. One can see that the 16 month suckler bull beef costs a lot to produce. For comparison purposes we had the 24 month suckler steer beef. The evidence from the Grange research is that a bull in or around 18 months provides the most competitive system for farmers. It is largely consistent with the dairy beef finding.
I will now look overleaf at the commercial evidence based on the Teagasc Irish Farmers' Journalbetter beef farm. This is primarily based on suckler animals. We have given the various results in terms of gross margin per hectare for a number of different systems. As members of the committee can see, the suckling to bull beef clearly emerges as the most profitable activity.
I want to address an important question that has been raised at this committee, which is what motivates Teagasc to undertake this research. I want to emphasise strongly that we have an elaborate system in place to advise us on how we should allocate scarce resources. We have established a number of stakeholder consultation groups, including a very active one in the beef sector. We do not always succeed but we strive to be responsive to industry needs. The stakeholders are all chaired by a non-Teagasc person and are representative of all aspects of industry, both farmers and processors. They advise us on our programmes.
As far as the Derrypatrick herd was concerned, there was a long-established view in industry that we needed to put in place a demonstration herd for suckler beef that matched the world famous Curtin's farm dairy herd at Teagasc's Moorepark facility. That was the motivation behind establishing the Derrypatrick herd. The set-up of this project was established with the close co-operation of the beef stakeholder group in 2010. That group identified 18 month bull beef as being the type of production that was the most opportune or most competitive for suckler producers, given the price differentials that existed at the time.
According to the minutes of 2010, it was clearly understood and it was discussed at great length that young bulls less than 24 months are the EU standard, but they recognised that the market is increasingly requiring that bulls are finished at younger ages - less than 20 months of age. There was never any issue that older bulls would in any way attain the required market specification. Based on market information, however, it was the understanding that a young bull in or around 18 months would have a reasonable market outlet. The 18-month system emerged from the analysis that was done on the competitiveness of the different systems. We saw earlier that the 16-month system was not competitive under Irish conditions. That was pretty well established both by the dairy and suckler research.
The stakeholder group is very active. It watches markets and tries to react and adapt. The Derrypatrick herd is very much designed to present the best of commercial farming practice, so it is worth noting that from 2012 onwards the group recommended that we should hedge our bets, so to speak. Half the male calves are being slaughtered as 24-month steer and the remainder as 18-month bulls. That was a good hedging strategy because concern was emerging that the differential that existed for a long time might be reversed.
I have included a chart which illustrates a couple of important points concerning the breakdown of slaughtering between bulls and steers. Clearly the dominant system, as Mr. Cotter said, is the steer one. One can see that from 2007 onwards, there has been a noticeable increase in the percentage of young bulls that are being slaughtered. In 2004, for example, one in ten of all slaughterings were young bulls. By 2012, that had risen to 31% and it is back this year to about one in four. There is no doubt that the significant driver behind that steady increase from 2007 to 2012 was the signal coming from the marketplace, which was the clear premium. That is what our stakeholders responded to and they told us in Teagasc that we were not doing enough research on bull beef. They said farmers were ahead of us and they needed information on the optimum system. There was a lot of debate, for example, as to whether 16 month bulls could be produced profitably. Our research demonstrated that they could not be.
I want to conclude with the advice we are giving to farmers. I have two pages covering advice. One is what I might call the traditional, long-standing advice.

The second set of advices is more relevant to the current circumstances. The traditional advice has always been that bull beef is a very specialised activity for a whole range of reasons, and farmers engaging in this practice - Mr. Cotter made the same point - need to talk to their meat processor before finishing bulls. We have always repeated that advice, but farmers are perfectly entitled to follow their own judgment. We communicate with 40,000 farmers every month through our newsletter. In September last year we warned farmers that the eight-month and 20-month finishing system for bulls is coming under increasing pressure and processors are no longer accepting bulls over 16 months of age. In our beef budgets every September we caution against farmers running off to produce bulls without having consulted with their processors.
That is the traditional advice. In the current context, our advice is very clear. We are saying that provided one talks to a processor first, there may be circumstances where well-grown suckler yearling bulls have the potential to finish profitably under 16 months. Suckler yearling bulls over 430 kg can be finished under 18 months but, again, we are saying that the processor needs to be consulted. Yearling Friesian bulls can be finished, but the same caveat applies in terms of consulting the processor. Friesian bulls under 16 months, under current price and meal concentrate conditions, are not profitable unless there is a contract in place. There may be a limited option to castrate animals and finish them as steers.
An obvious but important point to make by way of summarising is that bull beef systems are significantly more efficient than steer beef systems. Based on the long history of a positive price deferential, it is understandable that farmers might have opted to produce bulls. Many saw an opportunity in recent years when there was no price disadvantage vis-à-vissteer beef and, indeed, a small advantage. The potential was there to produce more meat per animal and the more efficient farmers saw the opportunity to produce more meat per hectare.
In regard to Teagasc's work on bull beef production, we work very closely with the industry. The research points clearly to the 18-month system as being optimal, which is why we chose that system in the Derrypatrick context and for the purposes of our better farms programme. Our advice always has been and continues to be that farmers who are considering finishing bulls should first establish that they have a market outlet.

Andrew Doyle (Wicklow, Fine Gael)
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I thank Professor Boyle for his presentation, which has given us much food for thought. I invite Mr. Gernon of the Irish Cattle Exporters Association to make his opening statement.

Mr. Paddy Gernon:

I thank the Chairman and members for inviting me to address the committee. I take this opportunity to thank Deputy Éamon Ó Cuív for his work in regard to shipping. I did not realise the extent of his efforts in this area.

The livestock export business is one of the longest-standing export trades in Ireland. Until the mid-1960s, the trade was mainly from Dublin to Holyhead, Birkenhead, Preston, Silloth and Glasgow. At about the same time, the first consignment was exported to Egypt under a contract for 10,000 young bulls. This was the forerunner of the north African trade which continued for a good many years.

The roll-on-roll-off business to France started with Irish Ferries in the mid-1980s and its service to Le Havre. Later on, Irish Ferries and Stena Line accepted livestock to Pembroke and Fishguard, respectively. P&O Ferries commenced a service at the beginning of the 1990s which could carry nine units of livestock. That company also carried Irish livestock from Dover to Calais, which were shipped from Rosslare by Stena Line and Irish Ferries. In June 1997, due to pressure from animal rights groups, P&O Ferries discontinued carriage of all Irish livestock. An action taken subsequently by a group of exporters to seek an injunction against P&O Ferries was dismissed by the High Court. This was further appealed to the Supreme Court and was overturned pending a full hearing which was later lost. Two other shipping companies then attempted to cater for the trade from Ringaskiddy Port but both failed.

P&O Ferries went on to sell its business to Celtic Link Ferries, which bought a larger ship catering for 20 units on three weekly sailings. Celtic Link Ferries sold its business to Stena Line this month. Since 1997, Stena Line has consistently refused to carry livestock on its routes from Rosslare to Fishguard and Dublin to Holyhead. Irish Ferries has stopped carrying livestock on its ships since the foot and mouth disease outbreak in 2001. As a consequence of all of this, exporters have been forced to go from Larne to Cairnryan, with livestock having subsequently to travel for up to ten hours to their destination in England.

This month, following pressure from the Irish Farmers Association and the Irish Creamery Milk Suppliers Association, Stena Line has agreed to resume a service for livestock from Rosslare to Fishguard at a cost of €900 for a 16.5 m truck. This is some €550 more expensive than the company's Belfast to Cairnryan sailing. The most convenient route for livestock destined for both the north and south of England is, of course, Dublin to Holyhead. Both Irish Ferries and Stena Line refuse to consider this route, however, resulting in animals having to endure up to an additional ten hours longer in transit. The trade is mainly in in-calf heifers and my appeal for the reopening of the Dublin-Holyhead route is on welfare grounds. Since Stena Line reopened the Rosslare-Fishguard route, the animals are arriving in excellent condition, but that is only of benefit to Welsh importers.

Andrew Doyle (Wicklow, Fine Gael)
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I thank Mr. Gernon. There was a great deal of information in the various presentations. This is an issue which is of particular interest to members and I will try to accommodate everybody. I call Deputy Éamon Ó Cuív.

Éamon Ó Cuív (Galway West, Fianna Fail)
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We have been given a great deal of information this afternoon. The bottom line is that there is a significant number of farmers with bulls they cannot sell or can only sell at a significant loss. If I understand correctly, the Bord Bia representatives are saying that the British market wants steer beef and the continental market will take the bull beef and, moreover, that the price on the Continent has been dropping while the price in Britain is at an all-time high. That seems a neat picture, but it does not explain the huge price differential between cattle started in Britain and their equivalents in Ireland. Can the Bord Bia delegates explain why the average cattle price in a factory here has, in the past six to eight months, been much lower than it is in Britain? I agree that we must compare like with like - steer with steer, bull beef with bull beef - but is it really the case that British consumers are willing to pay much more for British beef on the supermarket shelf than for Irish beef? Perhaps there are people with sufficient expertise in the beef trade to understand the logic of the situation, but it is not at all clear to us.

We have been following prices and the price differential in the factories. This is where the issue of live exports arises. Perhaps a representative from Bord Bia will respond to the following question. If one could get Irish beef into a factory in Britain, would one be paid the British price for it and, if not, why not? Why, in an open market, does Irish beef not make the same price as British beef?

Teagasc appears to be in favour of 18-month-old bull beef. Somewhere in the mix, however, Bord Bia and the factories seem to be advising that all beef should be 16-month-old bull beef. If I understand the position correctly, following this advice is not economic. I understand the major problem for farmers is that their beef does not meet the 16-month specification. Were the factories involved in the Derrypatrick idea to which Professor Boyle referred? While the data provided are interesting and fascinating, members will need time to study them. Were the factories aware of the view expressed by Teagasc that extra time creates much greater cost efficiency and other options are not viable? Did the factories warn the marketing personnel of Bord Bia that this approach would not work because the price would plummet if the beef was not 16 months old?

Bord Bia indicated that farmers should have spoken to their processor before getting involved in bull beef. I would not be satisfied discussing the issue with my processor as processors can always adopt the position of that was then and this is now. Is it common in the trade for producers to be given an irrevocable deal on the end price before purchasing animals? What percentage of farmers and finishers have a contract that provides for an end price at the start of the process? My understanding from the figures is that the price for bull beef has collapsed and unless a farmer has an irrevocable agreement with the factory setting down the end price, they will be told by the processor when they go looking for the cheque that processors have no control over the market, the market has changed, animals being exported to the Continent cannot be sold, and so on. I am interested in hearing our guests firm up the argument they make about talking to the processor first. The presentation uses the words "only produced on contract with a processor". Are contracts setting out a final price for the beef readily available? Talking to the processor will not do a heap of good if the price can change before the end of the contract.

When a large number of people lose out, it is often easy for people in the system to refer to various caveats. The world does not work like that, however, because the person left holding the can is the bull beef producer, many of whom are suffering substantial losses.

Last autumn, long before the present crisis arose, I put the following question to the farming organisations and others. Why can one not put an animal on a truck in Dublin and transport it via the shortest sea route - Dublin to Holyhead - straight into factories in Britain? All sorts of reasons have been cited, including the possibility that animal rights activists would be waiting on the other side. Animal rights activists do not appear to be concerned about the practice of loading animals on trucks here and transporting via Larne and Cairnryan to the south of England. This is a much more stressful journey for animals. Why is it practically impossible to transport live cattle via the shortest sea route to Britain when there is no problem transporting animals from this island to Cairnryan? The committee has spent six or eight months trying to get a straight answer to that straight question. What is the real reason? The absence of an answer makes some of us highly suspicious that different interests are at play, some of which have no connection with animal health and welfare.

Mr. Aidan Cotter:

In regard to the Deputy's first question seeking clarification on what the market wants, the United Kingdom wants steers, heifers or young bulls of less than 16 months. On continental Europe, where the market is principally for young animals produced as young bulls, we compete best with steers and heifers. Our differentiating factor on the Continent is that Irish beef is different as it is grass-based steer and heifer that has a different taste and superior eating quality. Ireland competes in this market and the industry - farmers and processors together - has built a very strong position on the continental markets based on grass-based steer and heifer beef.

The Deputy asked the reason cattle prices are higher in the United Kingdom than they are in Ireland. Half of our beef is exported to the United Kingdom, which has the highest price for beef in the European Union. The other half of our beef exports go to continental Europe where prices are approximately 20% lower than in the UK. The Irish price is somewhere between the price in the UK and continental Europe. We must also remember that the industry does not supply full carcases because markets and customers want cuts rather than full carcases. As a result, the cuts from a particular animal could end up in a range of markets. The composite price for Ireland is the sum total paid for all the cuts, which depends on which markets they end up in. For this reason, the Irish price is somewhere between the price in the highest priced market in Europe, namely, the United Kingdom, and the price in continental Europe, which is 20% lower than in the UK.

Deputy Eamon Ó Cuív:

I presume different cuts of animals slaughtered in Britain also go to different places.

Mr. Aidan Cotter:

As Britain is only 70% self-sufficient in beef, all the beef produced there stays in the country.

Deputy Eamon Ó Cuív:

If, using some magic formula, a steer from Ireland that is exactly equivalent to a British steer could be brought to a UK factory, would it command the same price as a UK animal?

Mr. Aidan Cotter:

I quoted a newspaper report in which a retailer insisted that Irish beef supplied to the company must be from animals born, reared and slaughtered in the Republic of Ireland, while British beef must be from animals born, reared and slaughtered in either England, Wales, Scotland or Northern Ireland. The retailer's specification precludes the supply of an animal that is born in the Republic of Ireland and slaughtered or processed anywhere in the UK. That is specifically excluded.

Deputy Eamon Ó Cuív:

What about if it was-----

Andrew Doyle (Wicklow, Fine Gael)
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The Irish Co-operative Organisation Society, ICOS, gave a somewhat different perspective to the committee. Its spokesperson stated that while smaller retailers in the United Kingdom were prepared to buy Irish-born cattle, some small abattoir owners had "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".

They were suggesting that smaller retail outlets did not have a problem with animals once their birth, rearing and slaughtering details were clear. That was the evidence to the committee the last day.

Mr. Aidan Cotter:

I agree with that. What I am referring to is the major multiples - Tesco, ASDA and Sainsbury's - which are the largest purchasers. We supply 250,000 tonnes and we need volume customers.

Andrew Doyle (Wicklow, Fine Gael)
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I accept that.

Mr. Aidan Cotter:

They are the best payers also.

Andrew Doyle (Wicklow, Fine Gael)
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It goes to another point.

Mr. Aidan Cotter:

The Chairman is correct that there are other parts of the market, including food services and further manufacturing, where identification of country of origin does not happen. This is a retail country of origin identification and it does not apply in the other sectors. There is nothing to stop animals coming in to be processed and sold in the marketplace.

Andrew Doyle (Wicklow, Fine Gael)
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There are other things happening that are stopping it but there is not in reality.

Professor Gerry Boyle:

Deputy Ó Cuív raised at least three important points which I would like to take up. I will ask my colleague, Mr. Kelly, to deal with the reference to talking to the processor.
I was asked about the knowledge of factories and processors of the fundamental economics of bull beef production. The factories supported some of the work we have done. At the inception of the work, there was not a great deal of knowledge of the economics of producing 16-month bull beef, but it became evident early on that it was not a runner in an Irish context at the prevailing prices of meals and product. While the factories made it clear that the market preference was for bulls under 16 months, they accepted the reality. That did not mean they were not prepared to accept older bulls up to 20 months or so. The fact is that the price data shows that bulls were being slaughtered up to that age. In some cases, that was until very recently. Our findings said that the 18-month bull was the optimum. While the processors clearly had a preference for younger animals, they accepted the reality of the figures we produced. There was some variation among factories on what was accepted depending on market outlets, etc. That is where the 18-month reference came from. It emerged clearly from the research.
There was a consensus among the stakeholder group that in the Derrypatrick herd it made sense to produce bulls because of the price premium. We were trying to drive technical efficiency as far as we could. The best beef producers in the country were more than capable of producing bulls and that is where the 18-month mark came from. Factories made very clear their absolute preference for bulls aged under 16 months but that did not mean they would not accept animals under 20 months. They were accepting them. They became aware very quickly of the uneconomical nature of the 16-month system. That was one of the key messages that emerged from the research.
I take the Deputy's point that caveats are no good if one is making losses. People forget the caveats. I can understand that perfectly. It should be borne in mind, however, that Teagasc depends to a significant extent for its income on its farm performance also. Teagasc's farms are worth approximately €3 million or €4 million to us, which feeds into supporting our advising and research. We were caught as well. The basic evidence shows the 20% premium in efficiency and the fact that, up to late last year, there was a premium. We were being criticised in the Irish Farmers' Journal and elsewhere for not doing more research on bulls. It was a fair point. Farmers wanted to know what the optimum system was. I take the point the Deputy has made on caveats. We try to adhere to them also in our own system. Mr. Kelly wants to answer the question on the point about the processors and contracts.

Mr. Pearse Kelly:

Deputy Ó Cuív asked about talking to the factory. One of the main reasons we advise farmers to talk to the factory is the processors' feedback to us that while it is fine for farmers to do bull beef, processors must know what supply of bull beef they will get. If one goes back to 2007, one was looking at 12% or 13% of the market which was bulls. If bulls were going to come into the system, processors needed to know how many bulls were coming in, when they were coming in and what their specification was to let them line up their markets and line up farmers to bring in bulls at different stages. That was why we advised farmers to talk to their main meat processors and to develop relationships with them. It is probably no different in terms of steers and heifers in relation to talking but bull beef is a very specific market and talking was necessary.

Deputy Ó Cuív asked if farmers had contracts. Some do. Contracts are not the kind of thing that are publicly spoken about. Relationships have been built up with factories over the years. A number of producer groups have built up quite good relationships with factories. There is no single contract which fits all. Many contracts have been based on talking to factories in the back end of the autumn about a guaranteed minimum price in the spring rather than a guaranteed price in the spring. That is where many contracts have been built up. It goes back again to the need to talk to factories. Where people have built relationships with their factories, they can talk about a minimum price contract. From our knowledge, they are not necessarily written in stone but are oral contracts which have been built on trust over years. Our understanding over the years is that those contracts have always been adhered to and followed through with factories. We have not come across situations in which a price was agreed but gone back on.

It is not a huge percentage of the market and is something we would like to see farmers move towards to a greater extent. Perhaps, Bord Bia can come back in on this in terms of the response. I have attended many farmer meetings over the years where farmers have demanded forward prices and the response from the meat industry has been that it does not have a forward price with supermarkets and it is therefore difficult to give such a price to farmers. That is where it lies in relation to forward prices or contracts. It is something we encourage. We have seen it in some systems. There was an under-12-month rosé veal system in which 12-month contracts were being given. Only 5,000 animals a year approximately were being killed on that market. It was a very small market but that is where the classic contract price was. We have seen a move in recent years to have more contracts over the winter but it has been where trust has been built up between factories and producer groups and individual farmers, respectively.

Andrew Doyle (Wicklow, Fine Gael)
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Does Mr. Gernon have an opinion as to why there was no resistance by animals rights groups to animals being moved from the North of Ireland as opposed to the south?

Mr. Paddy Gernon:

Animals rights groups have quietened down a lot since the time of Linda McCartney, who was their financer. They are nearly non-existent since then.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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I thank the delegation for giving us a great deal of information about the background. I would like to move matters to where we are today. Numerous farmers have sheds full of cattle which have gone past the age and which cannot be got rid of. That is the big issue. What advice can those farmers be given? I understand that the mystery answer cannot be provided but these people are under severe pressure. I was speaking to a man this morning who had 200 cattle which were the right age in January. It is now almost 1 April and he is in severe trouble. Nobody wants to talk to him. He is just one farmer. There are many like him around the country who need to be facilitated in some way. What can Bord Bia do for him? Can we source other markets? These animals are only two months over the age. There is very little difference.

I would challenge anybody sitting around this table to tell the difference between a plate of meat from an animal that was 16 months old and a plate of meat from an animal that was 18 months old. It is probable that people would be unable to do so. We need to get real in this situation. I would say that the simple solution in the short term would be to get extra markets. Can the area of exporting be addressed? Can it be looked at again? Obviously, the age profile needs to be addressed.

It is a damning indictment of the whole scheme of things that a ten year old fat cull cow would probably make more money than a bull that is 16 or 18 months old. The cow that has gone through the whole system, having made a substantial amount of money for the farmer over a period of time, seems to be the prime product from a financial benefit point of view. It seems to be more valuable than bull beef, which is supposed to be a top-class product. That is how I see the whole issue. Where can we go from here? We can talk about important facts and figures, but we have to address the issue that is there at the moment. I know it is not the fault of the witnesses that we are where we are at the moment. These are the facts and figures. The fact is that farmers on the ground are in serious trouble and are looking for a help-out.

Mr. Joe Burke:

Obviously, Bord Bia is mindful of and sympathetic to the issues farmers are facing at present. Mr. Cotter has described the difficult issues that are being faced by the producers of young bull beef, in particular, in the marketplace. Is it possible that the producer described by the Deputy has bulls that have exceeded a 24-month age limit, rather than a 16-month limit?

Pat Deering (Carlow-Kilkenny, Fine Gael)
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Not necessarily, no.

Mr. Joe Burke:

Right. Over the last month or six weeks, processors have increased to approximately 6,500 their weekly throughput of young bulls. The majority of those bulls would not be under 16 months of age. If they were under that age, they would meet the specifications of our more valuable customers or outlets - the UK retailers. The facts are there. As the Deputy has said, the average price of young bulls has fallen by 15% so far this year, by comparison with the same period last year. The price achieved by steers, which are obviously seen as a premium, higher quality or more attractive product, has fallen by less than 5% over the same period. They are still lower than last year. It is difficult for Bord Bia to convince customers to change their specifications. In some cases, specifications work in our favour. Mr. Cotter mentioned that many continental European customers are prepared to pay a higher price for Irish steer beef, as part of their preferred ideal purchasing conditions, even though they have access to plenty of bull beef that is produced domestically or in other lower-cost producing countries. Obviously, this works against producers, such as the producer described by Deputy Deering, who have animals like older bulls that do not meet those specifications, unfortunately. It has to be said that in many cases, the specifications do not relate directly to eating quality. Many other factors, such as the size of the cut, can come into play. In the UK market, the specifications relate to the young bulls produced in that country, the vast majority of which are under 16 months of age in order to qualify to meet customer requirements.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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I agree that the amount of bull beef being killed seems to have increased in recent weeks. However, I understand there has been a massive reduction in the number of steers and heifers killed in the same period. There seems to be something wrong there too.

Mr. Joe Burke:

The weekly cattle kill has increased by 7% this year compared to last year. In recent weeks, we have been killing an average of 33,000 cattle a week. That represents an increase of 2,000 cattle a week, when compared to the equivalent weeks last year. We have described the market as difficult. It is possible that it would not be in the interests of farmers to see the cattle kill increase even further, as this might put further pressure on the market. I accept that farmers are in a difficult situation. Some of them who have been trying to sell cattle have been told there will be further delays. It is difficult for farmers to be told that animals cannot be sold for another week, as it means they incur additional feed costs, etc. Farmers are being asked to produce and supply cattle in an orderly fashion to meet the requirements of a meat industry that demands a continuous and consistent supply of inspected, good-quality cattle 52 weeks of the year.

Mr. Pearse Kelly:

I assure Deputy Deering that our advisers on the ground who deal with farmers on a daily basis are hearing similar stories. Some people probably have a perception that this problem is confined to bulls, but the Deputy alluded to the bigger picture in this regard, which is that farmers are finding it difficult enough to get steers and heifers killed as well. Mr. Burke spoke about that as well. There can be problems with bulls over the age of 16 months, but the real concern is that the value of bulls which are approaching the 24-month age bracket can go off a cliff. They are considered to be old bulls, rather than young bulls, at that stage. Their price almost drops to cull cow levels. We are advising people with younger animals that there is an opportunity in that regard. When Professor Boyle was explaining his last couple of slides, he mentioned the advice that is being given at the moment. One of the options available to farmers is to castrate such bulls. We would not rush out to tell people to castrate all animals. People have relationships with factories that will still want bulls during the year. It is not necessarily the case that bulls are an absolute no-no. Bord Bia has suggested that between 20% and 25% of this year's national kill will probably still involve bulls. People need to step back and consider their options before they make rash decisions.

Andrew Doyle (Wicklow, Fine Gael)
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I would like to highlight a practical aspect of that point. Is the status of an animal on its identification card changed from "male" when castration takes place? When one registers an animal online, one can classify it as a steer or as a bull. Is that done merely for the purposes of record-keeping? Is it the case that a male is a male for the purposes of an identification card?

Mr. Pearse Kelly:

Yes.

Andrew Doyle (Wicklow, Fine Gael)
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There is some confusion about this matter. I have been asked about it. I know it has to be done under veterinary supervision. The identification card does not have to be changed.

Mr. Pearse Kelly:

No.

Andrew Doyle (Wicklow, Fine Gael)
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Okay.

Pat O'Neill (Fine Gael)
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I thank the witnesses for their presentations. This is the second day we have spent on this issue. The beef industry is in crisis at present. We are hearing that from those involved in it. I am a person who produces beef. I produced bull beef up to this year. I decided not to do so this year. I do not what inspired that decision. I castrated all the animals. I will still have a problem when I have to get rid of the steers in 18 months' time or two years' time.

I suppose we need to look at the figures. Mr. Cotter mentioned that the value of Irish beef is 104% of the EU average. I do not think that was a fair figure to produce. The Italian, German and English markets, where prices are significantly in excess of Irish prices, are the premium markets. We are being brought back in with the markets that are producing beef. Teagasc and, in particular, Bord Bia have done a great job over the years to sell Irish beef as the most traceable quality-assured beef in the world. We can nearly go back through every animal's genetics. We sell a product that we hope can be traced forever. I would not produce the figures for the Polish market because its beef prices are lower than ours. The biggest problem here is that we have approximately 1.5 million cattle to kill this year. That equates to approximately 33,000 cattle a week. It is projected that this figure will increase to 1.6 million cattle next year. How are we going to cope with this increased kill? The factories might be able to kill them, but what impact will that have on the price? If people are not getting a price that will keep them in profit, they will not stay in production. Having listened to all of today's presentations, I think it all comes down to the multiples.

We dealt with the multiples during the grocery legislation. They are setting the specifications. One and a half years ago when cattle were going well, there was no specification from factories. There was never a question of a specification from a factory for a bull to be under 24 months. There was never a specification for the weight of the carcass. Let us suppose that arose in the case of sheep and that for a carcass over 20 kg, one was not paid. If this comes in to the beef industry, it will close the beef industry. We hear that if the carcass is over 400 kg, the farmers are being paid a discount. Who decided the specifications for Irish animals being killed in Northern Ireland or exported to Northern Ireland?

This has knock-on effects, especially for smaller marts in the west. Irish animals are being discounted in Northern Ireland if they are going to a factory there. If an animal has four movements, they will not take it. I cannot remember all the specifications because I do not have them before me today, but there are specifications now. They have come from somewhere. Is it a case of the multiples deciding these specifications? I never counted England as a country of people that ate bull beef. Suddenly, there are specifications relating to 16 months. This is not only down to carcass size, as the deputation stated, but to the size of the cut.

We have a crisis. How will we manage next year? We will not unless Bord Bia opens up many more markets and we can get them in at a top price. There is no use opening markets unless we sell at a premium price because people will not stay in production if they are losing money.

Professor Boyle produced figures suggesting a loss of €360. A farmer cannot stay in production for that. There is another interesting figure indicating that live exports to Britain are up by 27% and up in Northern Ireland by 13% in 2014. These are not beef animals. What are these animals?

Mr. Paddy Gernon:

They are mostly cattle.

Pat O'Neill (Fine Gael)
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They are from the dairy herd. Is that correct?

Mr. Paddy Gernon:

Yes.

Mr. Joe Burke:

That is the case for Britain but most of the animals for Northern Ireland are commercial cattle.

Pat O'Neill (Fine Gael)
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A specification came in suddenly for Northern Ireland. They are being killed at a discount in Northern Ireland. It is affecting the marts. The Northern buyers are not coming down to buy Southern cattle anymore because when they bring it back up, it is being discounted when they try to sell it to a factory.

Andrew Doyle (Wicklow, Fine Gael)
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That is a fair point if anyone wishes to address it. What is the all-island status of livestock? It is something of a side issue but as a related issue it could be important. It is a question of the all-island brand. I know that Bord Bia has Irish, Northern Irish and Republic of Ireland labels.

Mr. Aidan Cotter:

Yes, that is with regard to our quality mark. It is primarily used in the domestic Irish market. I might come back to that.

I wish to clarify the figure of 104% of the European Union price. This relates to the EU 15 countries and it excludes Poland. As I remarked in the paper, Irish steer prices exceeded equivalent young bull prices in France, Germany, Spain and Italy for most of last year. While there is no question that producers need more to make a profit, the performance has been reasonably good by comparison with other market prices in the past year.

Reference was made to an Irish brand. Again, this comes back to whether the United Kingdom market would accept an Irish brand. It is basically a British and Irish brand. There are only two labels used by the multiples at the moment. The consumer pays the same price, as the committee learned in a previous session, whether it is British or Irish. Obviously, if there was a British and Irish brand, it might not necessarily make any difference because it is still the case that half our beef will end up in a market region where prices are 20% lower. I am unsure that suggestion would be a solution.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Can I say-----

Andrew Doyle (Wicklow, Fine Gael)
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I will come back to Deputy Ó Cuív presently.

Pat O'Neill (Fine Gael)
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No matter what anyone says, the major factories are operating in the United Kingdom and Ireland. An animal that is bought in an Irish mart and that crosses the Border to Northern Ireland is discounted. How can that be allowed? How can that happen? That is the multiples or else someone is manipulating the market by doing this. It is affecting people and it will have serious consequences in the autumn of this year in respect of weanlings being sold, especially in the marts around the west.

Mr. Aidan Cotter:

The customer specifications have not changed. By customer specifications, I mean the retailers or food service operators. They have not changed their specifications. The labelling practices have been in place for 13 or 14 years. Nothing in the marketplace has changed.

Pat O'Neill (Fine Gael)
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I know that, but for years Northern buyers were coming to the marts in the South and buying cattle. They were keeping the price of summer cattle at a reasonable level. There were buying cattle, bringing them to the North, fattening them there and selling them on. There was no cut. Suddenly, these specifications appeared. I never knew anything about specifications like these. They were never produced by factories in respect of the price they were paying for cattle. These include specifications such as 70 days in the herd for quality assurance, if there have been four movements, they will not take or kill the cattle, and if livestock has been reared in the South and killed in Northern Ireland, it is discounted. There were never such specifications before. Suddenly, when there is a little oversupply, the factories are using the change to their advantage at the cost of the primary producer, the farmer.

Andrew Doyle (Wicklow, Fine Gael)
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That is a comment rather than a question.

Pat O'Neill (Fine Gael)
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It was part of the question.

Andrew Doyle (Wicklow, Fine Gael)
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It was not an interjection.

Tom Barry (Cork East, Fine Gael)
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I welcome the deputations. While Bord Bia believes there is a positive future for beef production in the country, as Mr. Cotter has stated, the farmers do not believe it and this is where the kernel of the matter is going. Most farmers who come to me regularly cannot manage.

The papers are lovely and aspirational and it is great to see all the statistics, but farmers cannot cope with the divergence in price between here and the United Kingdom. They believe they are being treated poorly. I believe there is a certain connection between the multiples and their demands for cheaper food. I believe the factories have bought into a situation whereby they work closely with the multiples. I am choosing my words carefully. I believe so-called hello money, or whatever term people wish to use to describe it, exists. I also believe prices will increase significantly after June when the farmer's stock has been given away and we are back to the feedlots supplying. Many farmers are coming to me in desperation. There ask why we do not simply have a boat and that we should forget this grid business because it is breaking them.

We are in a situation whereby we know what we need to get to by 2020. It is not the fault of the deputations in any way. We know where we need to get to and many good people have put a great deal of good work into improving our beef breeds, etc. However, it will be undone. We are not too far away from the 8 cent per burger that was required from Silvercrest to produce a burger when 80 cent should have been required. That behaviour has not gone away. Until we get to the core of this rot, there is no future for beef farming. I may be somewhat controversial in this regard but I truly believe we cannot stand idly by while our beef producers are slowly going out of business.

Andrew Doyle (Wicklow, Fine Gael)
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Would anyone care to respond?

Mr. Aidan Cotter:

It is important to acknowledge that farmers have taken a huge knock in recent times. This has made a big dent in their confidence. Without confidence, producers are less likely to commit themselves in a significant way to the future. I believe the outlook is positive but clearly there must be a greater sense of trust throughout the industry among all stakeholders. They must work together because no one part of the supply chain can work on its own and be successful. I am completely in agreement with the sentiments Deputy Barry has expressed in terms of trying to find a way forward that can instil better confidence in producers in future.

Éamon Ó Cuív (Galway West, Fianna Fail)
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We could spend another month discussing this matter. We are going nowhere. Ultimately, while we are talking, farmers' businesses are going down the tubes. There are people who invested a great deal and whose farms are now haemorrhaging money. I wish to focus on a dichotomy which I perceive to exist. There has been a great deal of discussion with regard to a grass-based system. Does the production of 16-month bull beef constitute a grass-based system or is it a meal-based one? My understanding is that these animals have to be fed ad-lib meal. We are codding ourselves.

I do not know whether the marketing people present have an answer to my second question but I will pose it in any event. How many head of cattle do the beef factories have in the feed lots they own on contract and that are on call for slaughter at any one time? I ask this question in the interests of discovering whether, if farmers held back their animals, the factories would have a ready supply of animals for slaughter.

The third matter to which I wish to refer is one that is of importance to Bord Bia. Is there any information available from the Department of Agriculture, Food and the Marine in respect of the importation of Polish beef into Irish factories to be processed and then exported? What steps have been taken to ensure that none of that meat leaves the country labelled as Irish beef to be sold in foreign markets as such?

Many people believe that since the horsemeat crisis of last year and the introduction of much better checks in factories in the context of what product is going where, a huge differential has opened up between Irish and British beef. I must state bluntly that there are those who are suspicious as to whether there is or there is not a connection in this regard to the much greater level of scrutiny in respect of what is being packed into boxes in factories. Perhaps our guests from Bord Bia might indicate how I might establish whether a steak I order in the Members' restaurant tonight originated from a side of 16-month, 18-month or 20-month bull beef or whether it is steer beef, heifer beef or any other kind of beef. Would I be able to identify the source from which the steak came? There are too many unanswered questions regarding the differential in the price.

Since 1997 Stena Line has consistently refused to carry livestock on the Rosslare to Fishguard and Dublin to Holyhead routes. Which shipping company carries livestock from Larne to Cairnryan?

Mr. Paddy Gernon:

On the Larne to Cairnryan route it is P&O. On the Belfast to Cairnryan route it is Stena Line.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Stena Line?

Mr. Paddy Gernon:

Yes, it has three sailings to England out of Ireland. The price charged by Stena Line in respect of the Belfast to Cairnryan on Stena Line is in the region of €330. On the new route between Rosslare and Fishguard it is €990.

Andrew Doyle (Wicklow, Fine Gael)
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Is that per unit?

Mr. Paddy Gernon:

Yes, per unit.

Éamon Ó Cuív (Galway West, Fianna Fail)
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All sorts of theories are put forward in respect of this matter. One is to the effect that a great deal of dead meat is transported out of the State on ships which cross the Irish Sea and that those who export it are very important businesspeople who have much influence over the shipping companies. Is Mr. Gernon in a position to provide a rational explanation as to why it seems to be so difficult to encourage companies - even those which transport slaughtered beef - to carry live cattle from Dublin or Dún Laoghaire to Holyhead? I presume it would take longer to transport cattle from Belfast.

Mr. Paddy Gernon:

It is much the same, that is, approximately three and a half hours.

Andrew Doyle (Wicklow, Fine Gael)
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There are a couple of questions from the Deputy which remain to be answered, one of which relates to imports of Polish beef. Professor Boyle already indicated that 16-month bull beef comes from animals fed on meal rather than on grass. Deputy Ó Cuív also asked about the number of cattle which are kept in factor feed lots.

Mr. Aidan Cotter:

We do not know what individual operators hold in their feed lots. Everybody is aware that they have animals in those lots but, as far as I am aware, only the operators know the numbers involved.

Imports of Polish beef fell from 1,800 tonnes in 2012 to 450 tonnes last year. Those 450 tonnes primarily took the form of frozen processed beef and it is of a type that could not be used to supply the premium fresh market. There should be little or no opportunity, therefore, for it to be labelled as fresh Irish beef.

Éamon Ó Cuív (Galway West, Fianna Fail)
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Is Polish beef being imported this year?

Mr. Aidan Cotter:

We have no statistics yet for this year.

Andrew Doyle (Wicklow, Fine Gael)
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They are only available for 2012 and 2013.

Professor Gerry Boyle:

A number of references were made to the difficulty in differentiating between the taste of different cuts. We have done a great deal of research on that matter and I can state that Deputy Ó Cuív is absolutely correct: there is no sensory difference that can be detected. However, my colleagues from Bord Bia will testify that marketing is about perception as reality. The perception is that there is a difference or at least that is what we are told. Mr. Burke made an important point with regard to the size of the cut being an issue. One would certainly know by taste and size if one were served a T-bone steak from an old bull. Our evidence indicates that consumers cannot distinguish. On the specific point relating to the 16 months, there are some nuances which Mr. Kelly will outline.

Mr. Pearse Kelly:

One just needs to be careful whether one is referring to under 16-month dairy beef or under 16-month suckler beef. For the past 12 months, under 16-month suckler beef would have been allowed onto the grid by many of the meat processors. The advantage of this is that, as Professor Boyle pointed out, they attract a higher confirmation. This means that if one is on a base price, one will be getting the quality assurance of 12 cent per kilo and attracting bonuses as a result of the fact that one is killing U-, U=, U+ or E- grade cattle. Those bonuses are quite significant and they are all added to the base price. The other point in respect of suckler beef under 16 months old is that one will be killing spring-born bulls under 16 months old in or around May or June. Traditionally, the highest price has been obtained during those months. Professor Boyle is correct in stating that if one considers today's prices for bulls under 16 months old, one will discover that they are unprofitable. This is no different from the position with regard to much beef production, based on the price available on the market.

The difference with dairy bull beef is that the relevant animals are not on the grid. If they were, in all likelihood - and as a result of their confirmation - many of them would be discounted rather than attracting bonuses. These animals are significantly less profitable to the point where they are unprofitable. The only way a dairy bull under 16 months old could become profitable would be if there was a significant reduction in the price paid for dairy bull calves from day one. This would mean that other farmers would suffer in the same way dairy farmers are currently suffering. It is a small cake. They would also become profitable if meal prices - which are related to cereal prices - dropped significantly. In its projections for the next ten years, the OECD is not predicting a drop in cereal prices. If anything, it is predicting an increase.

Andrew Doyle (Wicklow, Fine Gael)
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Am I correct in stating that no research or trialling has been carried out on dairy bulls in the context of veal production as opposed to-----

Mr. Pearse Kelly:

That would have been done at Johnstown Castle. While Professor Boyle outlined the position regarding 16-month and 19-month bull beef, the trials carried out at Johnstown Castle in 2010 and 2011 involved bull beef as young as under eight months old. Trials were carried out in respect of the latter and on beef under 12 months old, which is rosé or red veal. Again, both of those systems are what we would describe as almost landless systems. One does not need land for them in that the animals are not put out to grass at all. They remain indoors from birth through to slaughter and they are fed 100% on meal. At that point and in the context of the nitrates directive, one is down to requiring somewhere to which one can export the slurry. Again, these animals are hugely sensitive in the context of calf price, meal price and beef price. In the past a premium would have been paid for red veal-type animals but as the overall average price of beef rose in recent years, the price advantage relating to them has almost disappeared. As a result, the system has come under serious pressure.

I would not say it is non-existent but-----

Michael McNamara (Clare, Labour)
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I apologise for having to leave along with Deputy Penrose. I was at a meeting on the afternoon's events. I would like to focus on exports. I do not wish to duplicate Deputy Ó Cuív's questions and I apologise if this has been covered. What can the Government do given that it is private operators who are operating to increase the carriage options to both Great Britain and the Continent? More important, is it fair to say the most important thing is to try to increase live export options to third countries outside the EU? When we export to the EU, we are effectively competing with animals we kill here. Is there a problem with the shipping licensing regime in respect of getting them out of the EU or does the problem lie more with the markets to which we have traditionally exported, such as Libya and Egypt?

Mr. Paddy Gernon:

There are no restrictions and there is no problem in shipping cattle. We have a market for them. The problem lies in getting them there. One can get to the Continent easily enough, for example, from Rosslare to Cherbourg, but one cannot get across England.

Michael McNamara (Clare, Labour)
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What is the problem with regard to north Africa?

Mr. Paddy Gernon:

In respect of north Africa, the ships would be the highest specification in the world passed by the Irish Marine. Years ago, there were plenty of ships going in. There were a couple of accidents on ships and cattle were injured. This high specification was brought in. There were two shipping companies in the Netherlands which said, when asked for a ship, that they could not supply the Irish specification. That ship has not even been made yet. Ships have been converted that are doing it now and the trade to Libya is all right. There are not enough ships to take cattle to Libya.

Michael McNamara (Clare, Labour)
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In respect of the specifications by the Irish authorities, one must compare like with like given the distances that must be travelled from Ireland to north Africa. One cannot compare them with ships that might cross from Spain to north Africa, which is a one-and-a-half-hour crossing. Given the distances, is the specification higher for Irish ships that go to north Africa than it is for Scandinavian, Dutch or British ships that would be travelling the same distance with similar cargo?

Mr. Paddy Gernon:

The Irish specification is higher than that of any other country in the world. It is a good thing in a way.

Michael McNamara (Clare, Labour)
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Where did that specification come from? Is it an EU specification?

Mr. Paddy Gernon:

It is an Irish specification.

Michael McNamara (Clare, Labour)
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When was it introduced? Was it a ministerial order or is it contained in legislation?

Mr. Paddy Gernon:

It was introduced about ten years ago. I had an inquiry for Libya last June 12 months and a ship called the Nabolsi. The owners wanted to come to Ireland and wanted steers and bulls up to 30 months. It took me three months to get a draft from the Department. I got the draft on 11 July for 30 months. I sent it on to Libya. They had been dealing with the Department to get the ship licensed. I sent it on to them and the next morning and received an e-mail saying that there was a mistake and that only cattle under 24 months could be shipped to Libya.

Michael McNamara (Clare, Labour)
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Over 24 months.

Mr. Paddy Gernon:

Under 24 months.

Pat O'Neill (Fine Gael)
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Where does that come from?

Mr. Paddy Gernon:

That came from the Department of Agriculture, Food and the Marine.

Pat O'Neill (Fine Gael)
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Was there an explanation?

Mr. Paddy Gernon:

No, it gave me no explanation.

Andrew Doyle (Wicklow, Fine Gael)
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Through the Chair.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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Is there a market in Libya for cattle under 30 months?

Mr. Paddy Gernon:

I do not know. Cattle under 30 months are going from Spain. I have a health certificate from Spain to prove that.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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One could say there is a market for them.

Mr. Paddy Gernon:

There is.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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I know this is possibly the same question as that asked by Deputy McNamara. What can the Government, the Minister, this committee or possibly Bord Bia do to get into that market?

Mr. Joe Burke:

I will tackle that one. Two boatloads of cattle have been sent to Libya this year.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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Are they cattle under 30 months?

Mr. Joe Burke:

The majority were young bulls between 12 and 14 months.

Pat Deering (Carlow-Kilkenny, Fine Gael)
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In respect of 30 months, to alleviate the problem that seems to exist-----

Mr. Paddy Gernon:

The ones going out at the moment are doing so under a licence for cattle under 24 months.

Mr. Joe Burke:

That is the health certificate between the Department of Agriculture, Food and the Marine and the Libyan authorities.

Andrew Doyle (Wicklow, Fine Gael)
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Is there any reason for that?

Mr. Joe Burke:

I am not sure. Mr. Gernon is involved in it a bit.

Mr. Paddy Gernon:

I cannot understand why it reduced it from 30 months to 24 months.

Mr. Joe Burke:

Twenty-four months would still cover the majority of any young bulls we would want to send over there. It should not be that restrictive either as regards steers. The majority of forward steers could still be sent up to that age.

Andrew Doyle (Wicklow, Fine Gael)
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It certainly would add to the options.

Mr. Joe Burke:

There are a number of other markets as well. Cattle have travelled to Tunisia and Morocco via roll-on roll-off boats.

Michael McNamara (Clare, Labour)
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What is the rationale for 24 months or for any age?

Mr. Joe Burke:

I think Professor Boyle mentioned this in his paper that according to the EU definition, a young bull is a young bull aged under 24 months. That might be part of the background. They are considered prime beef or a prime animal up to that age, and over that they are considered a mature animal.

Michael McNamara (Clare, Labour)
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I can see what could be wrong with exporting mature animals to the Continent because they would be killed there and would be competing with Irish animals killed here but if they are going to a third country like Libya, what is wrong with exporting 12 year old cows if that is what they are looking for over there?

Mr. Joe Burke:

The background historically would have been based on BSE risk. Obviously, that is no longer a factor. Certainly, our vets would have reassured the authorities in that country but that would have been what the feedback and the demand would have been. To be fair, most of the demand so far for Irish cattle has been for younger cattle. I know Irish exporters would have liked to have sold heavier cattle if they could have. Perhaps at certain times, buying heavier rather than lighter animals would have represented better value, but that was the feedback and demand. One could put 2,500 light cattle on a boat whereas one might fit only 2,000 or 1,800 heavier cattle on it, so the transport cost per head or even per kilogram might work out more expensive for the heavier cattle than for the light cattle. That might be part of the reason we have sent mainly light cattle so far.

Andrew Doyle (Wicklow, Fine Gael)
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The fact the Libyan market is open at all is to be welcomed so one certainly would not want to be rushing one's fences on it. There is the issue of confidence.

I thank the members and witnesses. Part of me says that some people will look at this meeting and be happy we have achieved very little. Deputy Barry put his finger on it. If this does not make economic sense in the future, the beef industry will not continue. Certainly the finishing end of the beef industry will become akin to the pig industry where it is controlled by the processors who will own large feedlots and farmers in the main will supply animals for finishing in these feedlots. If they are not going to go into primary dairy production, many dry stock farmers will look at being a secondary part of the increased dairy output story in Ireland. If we are serious about it, we must find some way of getting everyone to sit down together and give some assurance to people if they go into producing.

Mr. Cotter made the point about the better beef programme which was built around a model approved by consensus of all stakeholders and then things changed suddenly. In the case of the sheep sector the point was made that it is easy to get in and out of the sector because the situation changes very quickly but this is not the case with beef. In many cases the most efficient producers behind the farm gate need to know that they can make a living out of the sector. Most of their income comes from farming - or making losses from it in this case. All stakeholders need to pull together. Teagasc and Bord Bia in particular can do all the work but if they do not know from day to day what way the market changes there are reasonable grounds for people to be suspicious about what is the real situation. We need to plan for the long term rather than just going from one year to the next. We had a difficult year as a result of the horsemeat scandal.

The industry has spent a lot of money in promoting itself. Bord Bia has spent a lot of taxpayers' money promoting Irish beef as being grass-fed and the best in the world. Origin Green really works. Yet, there are various road blocks that will impede the Food Harvest 2020 output targets. Professor Boyle made the point about bull beef being more carbon-efficient but that has no value as yet. We have not put any efficiency value on it yet it is a significant fact which is not being factored into the price.

We were talking earlier about the black-faced mountain lambs. I can guarantee that grade or quality would not matter, whether an animal is too light or too heavy; if it is fit to process it will make a premium because this is about supply and demand. It is as simple as that. In my view for those of us involved, there has to be an escape valve which has been part and parcel of the Irish beef story for as long as I and those older than me can remember, which is live exports, whether we like it or not. Bord Bia might not agree but it seems that it is the safety net for the industry.

Mr. Aidan Cotter:

I would not like to let the Chairman's comment pass. We support live exporters in any way we can. We believe that farmers must be supported.

Andrew Doyle (Wicklow, Fine Gael)
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I apologise because I did not mean it in that way. I meant that live exports are needed for certain markets and if we are unable to get rid of those young male dairy animals. I did not mean to say that Bord Bia does not support the live export trade.

Pat O'Neill (Fine Gael)
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When Bord Bia and the Department opens a new market, what is the input from the factories for supplying that market?

Mr. Aidan Cotter:

The Japanese market is the most recently opened. We have been working very closely with all the meat factories in order to get each plant approved and licensed for exporting to Japan. The product is produced in small volumes by each meat plant and there is a need to collaborate in order to achieve a critical mass. We are examining different options with the factories and it is moving apace.

Pat O'Neill (Fine Gael)
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I was in Japan recently and I met Bord Bia's representative. He said that it is coming in at 1,000% more than previously since the Japanese market opened. I know it is a small quantity but it would make a difference of a penny a pound to farmers in this country.

Andrew Doyle (Wicklow, Fine Gael)
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I thank the witnesses.