Mr. Joe Healy:

I thank the Chairman and members of the joint committee for inviting us to address them on this important sector. As the Chairman has named those who are with me this afternoon, I do not need to introduce them again. The severe challenges in our important livestock sector, particularly our suckler cow sector, include low incomes, Brexit, beef prices which are below the cost of production, a lack of price competition, the proposed Common Agricultural Policy cuts, increased beef imports from Mercosur and other trade deals. According to the latest Teagasc data for 2018, the average income on cattle rearing farms is just over €10,000, which represents a decrease of 19% on the 2018 figure. This is not sustainable. We need a much stronger and more supportive Government policy for the suckler cow sector.

As part of the IFA campaign to secure additional targeted direct payments of €200 per suckler cow, we retained the services of an eminent agricultural economist, Professor Thia Hennessy, who is the head of the Cork University Business School in UCC. Professor Hennessy and her team undertook a full assessment and overview of the suckler beef sector. They produced a comprehensive report, The Economic and Societal Importance of the Irish Suckler Beef Sector, in August of this year. We launched the report at the Tullamore Show and presented a copy to the Minister for Agriculture, Food and the Marine, Deputy Creed. Further copies were sent to all Members of the Oireachtas. The objectives of the report were to assess the importance of the suckler cow herd to Irish agriculture, the Irish beef sector and the Irish economy, to examine the economic and social impact of the suckler herd, especially in terms of people and employment, and to explore environmental and policy issues relating to the suckler cow herd. I understand that members of the committee were given a copy of Professor Hennessy's full report in advance of today’s hearing. This presentation provides a summary of the main findings and conclusions of the report.

This country's very significant beef sector accounts for more than a third of all agricultural output and over 20% of total Irish food and drink exports. The agrifood sector in general provides direct and indirect employment to over 300,000 people, with over 13,000 people employed in the meat processing sector alone. The value of beef exports is growing and exceeded €2.6 billion in 2017. Domestic consumption of Irish beef accounted for a further €230 million last year. It is estimated that the overall value of the Irish beef sector is almost €2.9 billion. According to CSO data, the large and valuable beef sector is supported by a suckler cow herd of approximately 1 million cows. Recent reports based on the Department of Agriculture, Food and the Marine's animal movement identification system put the figure closer to 900,000.

The suckler cow herd is distributed throughout the country, but is particularly dominant in the west, which is my own part of the country. The important regional presence of the suckler cow sector is reflected in the fact that suckler cows account for over 80% of all cows in the west, with the figure in excess of 90% in some counties. Cattle farmers make a considerable contribution to the Irish local economy through the inputs they purchase and the outputs they produce. There are almost 78,000 specialist cattle farms in Ireland. It is estimated that cattle farmers spend over €1.5 billion on agri-inputs each year. Most of this is spent in the local rural economy. The considerable economic impact of agriculture, particularly the beef sector, exceeds that of many other sectors in the Irish economy. This means that an increase in output in the beef sector generates relatively more economic activity than a comparable increase in other industrial sectors.

Indeed, the multiplier effect for the beef sector is greater than that of the agriculture sector in general, with a €1 million increase in beef sector output generating a further €2.11 million in the wider economy and supporting an additional 16 jobs. The comparative figure for the agriculture sector more generally is €1.44 million.

Direct payments made to farmers also make a substantial contribution to the wider rural economy as farmers use these payments to purchase inputs and to generate output that leads to further economic activity. Research has estimated that every €1 of direct payments to cattle farmers supports €4.28 of output in the wider economy. In addition to the economic impact, suckler farmers contribute to wider societal sustainability, particularly as they are often located in marginal or economically disadvantaged areas where their presence is vital to the social and cultural fabric. They produce public goods such as protection of the environment and biodiversity, the preservation of the landscape, and unique features such as stone walls and hedgerows, all of which contribute positively to the image of rural Ireland and to rural tourism. Research has shown that extensive grass-based farm systems such as suckler cow farming deliver higher levels of public goods.

Despite being a small island on the edge of Europe, Ireland punches above its weight when it comes to beef exports. This country is the largest exporter of beef in the EU and the sixth largest exporter of beef in the world. The national suckler herd is of fundamental importance to Ireland’s reputation as a major exporter of high-quality prime beef. Cattle from the suckler herd generally have a superior grading profile and heavier weight for age, resulting in higher saleable meat yield and higher value cuts.

The prevalence of Irish-owned companies in the beef sector and the relatively low reliance of beef farming and meat processing on imported inputs mean that beef exports make a major contribution to net foreign earnings in the Irish economy. It is estimated that every €100 of exports from the bio sector, which includes beef, generates €48 in net foreign earnings, while the non-bio sector contributes only €19.

Consumers worldwide are becoming increasingly concerned about the sustainability of food production. This provides a unique opportunity for Ireland as we produce some of the world’s most sustainable beef. The carbon footprint of beef production in Ireland is well below the European average. It is the fifth lowest in Europe and almost one quarter of the Brazilian footprint. The beef data and genomics programme, BDGP, is delivering further carbon efficiencies, with the Irish Cattle Breeding Federation estimating that, by 2030, the genetic gain achieved through the programme will reduce greenhouse gas emissions by 14% per kilogramme of beef produced.

There are many positives around the sustainable system of Irish beef production. The UN rated Ireland as the most water efficient producer of food globally, with a 0.2% stress rating. Other international studies have shown that Ireland is the most nitrogen efficient producer of livestock products in Europe. Animal welfare in Ireland is very high by global standards. Growth promoters and hormone treatments are forbidden and our clean, green image is a major marketing strength internationally. Furthermore, grass-fed beef has been proved to be healthier and lower in fat, with two to six times more omega-3 fatty acids. As such, demand for grass-fed beef is growing, especially in affluent markets.

The positive attributes of our beef sector and our marketing and promotional campaigns are all built on the back of our quality suckler beef herd. The economic outlook is for continued growth in the global demand for beef, with the OECD and the UN Food and Agriculture Organisation, FAO, projecting that global consumption of beef will grow by 9% by 2026. The recent opening of the Japanese, Chinese and American markets for Irish beef is also a positive development, especially in light of the potential threat posed by Brexit.

However, those markets must deliver for farmers rather than just promise delivery.

Notwithstanding the economic importance of the beef sector to the wider Irish economy and its continued success on international export markets, the Irish industry is underpinned by a farm sector facing considerable economic difficulties. The income situation on cattle farms in Ireland remains challenging, with the Teagasc national farm survey showing an average farm income of just €12,500 for cattle-rearing farms in 2017. On average, costs of production exceed market prices. Reliance on direct payments is critical. Without a substantial increase in beef prices or improvements in efficiency levels or both, the vast majority of cattle farmers will continue to rely on direct payments.

Furthermore, a number of threats loom on the horizon for the future of the Irish beef sector. Brexit and other international trade agreements such as Mercosur threaten future trade patterns and, ultimately, farm-level prices. The impending reform of the Common Agricultural Policy, CAP, may also impact on the value of direct payments to farmers. The impact of climate change policy on the ability of the sector to exploit future market opportunities is a further threat as Ireland is committed to a number of international agreements to reduce greenhouse gas emissions. In the context of sustainable food production, however, international carbon leakage is a major concern. Carbon leakage occurs if Ireland reduces the production of beef to meet international policy commitments but less carbon-efficient countries increase beef production to satisfy growing international demand.

The very difficult income situation on Irish suckler farms is unsustainable and is already resulting in individual farmers reducing animal numbers, leading to a loss in beef output, export values and employment. It is estimated that a 10% contraction in the suckler cow herd would lead to a loss in beef output of €145 million and a loss of total output in the economy of €305 million. A contraction in the Irish suckler cow herd may also lead to land abandonment in marginal areas, causing a loss of natural landscape features, biodiversity and a contracting rural community.

The Irish suckler cow sector is at a critical juncture. A number of factors threaten its development and sustainability. Without positive action, it is likely that these factors will lead to a contracting national suckler cow herd. This will have implications for the large farming community engaged in suckler farming, the vibrancy of rural areas, the agri-input sector, employment in the beef processing sector, and the value of exports from Ireland. These negative implications will be most harshly felt in the west of Ireland, particularly in local economies and communities where there may be limited alternative economic opportunities.

I will now hand over to our livestock chairman, Mr. Angus Woods, who will outline the developments leading up to and since the budget and further necessary action to support and maintain our suckler cow herd.