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.