Mr. Joe Healy:

I thank the Chairman. We have submitted the document already so I do not propose to go through it all. I am joined by Mr. Angus Woods, chairman of the national livestock committee, and by Mr. Kevin Kinsella, the director of livestock. The single biggest challenge in the beef sector is low farm incomes. The Teagasc national farm survey, NFS, for 2017 showed an average farm income on cattle rearing farms of just €12,529 and just over €17,199 for other cattle farms. A year later, in 2018, each of those figures was down by about €2,000, to €10,175 and to €15,412, respectively. The NFS also highlights the importance and dependence of the beef and livestock sector on direct payments in terms of farm income. For cattle rearing farms, direct payments account for 114% of their income, and for other cattle rearing farms, such as store and fattening, the figure is 96%. It is clear from this data that any reduction or cut to direct payments will impact severely on the incomes of livestock farmers. This is critical in terms of the future reform of the Common Agricultural Policy, CAP.

Incomes on livestock farms are defined in four critical areas: cattle prices, direct payments, costs, and productivity. In order to address the income challenges on livestock farms, policy must focus on addressing these issues. To develop the beef and livestock sector to reach its full potential, the sector must return a viable and sustainable income at farm level. Without this, the sector will continue to struggle. While addressing the issues raised by the committee regarding the challenges facing the beef sector and Food Wise 2025, the IFA submission to this committee focuses strongly on proposals and recommendations to address the income crisis in the beef and livestock sector at farm level. The IFA is strongly of the view that the Food Wise 2025 strategy needs to be revisited with the primary objective of developing and implementing policy change on the beef and livestock side that will deliver profitability to beef and livestock farmers.

The most fundamental problem in the Food Harvest 2020 and Food Wise 2025 national strategy for the beef and livestock sector is the absence of a clear policy to make beef farming profitable for farmers, and its ongoing failure to deliver a fair income back to farmers. While the Food Wise strategy has delivered substantial growth in the volume and value of beef output and exports, it has failed to address the income crisis at farm level.

In detailed submissions to the Government in 2015, and again in 2017, as well as in every annual budget submission, the IFA has consistently highlighted the farm income issue, and the need for farmers to be rewarded for their work and to get a fair income return. An analysis of the data from 2012 to 2017 showed that the value of beef exports in Ireland had increased by €360 million, or 19%. However, in the same period, there was no increase in beef and livestock farm incomes. The reality under Food Wise 2025 is that beef output, exports, and value have all grown. The Minister, along with Bord Bia and the factories, have lauded this as a major success. However, cattle prices and farm incomes have fallen, and we need more success for farmers from this strategy.

Beef prices in Ireland are low and inadequate to cover the costs of production and leave a margin for the farmer. Irish cattle prices are consistently and substantially below the prices in our largest export market in the UK. Irish prices have closed the gap with average EU prices over recent years but with Brexit uncertainty, prices have fallen back below the EU average. There is a severe lack of competition in beef cattle prices in Ireland that needs to be addressed. The more powerful retailers and meat factory groups dictate the pace on cattle price at the expense of the farmer.

In the ten-year period, 2000 to 2009, inclusive, the average price gap was just under 24 cent per kilogram. However, in the ten year period , 2010 to 2019, inclusive, the price gap almost doubled to 41 cent per kg, an increase of over 70%. While the Minister for Agriculture, Food and the Marine constantly reminds farmers that he cannot become involved in the issue of cattle prices, the Government has a major responsibility to ensure there is a fair and competitive market for farmers in selling cattle in Ireland. We are calling on the Minister and the committee to request the Competition and Consumer Protection Commission, CCPC, to undertake a comprehensive analysis and produce a report on the lack of competition in the beef processing sector.

With a view to bringing more transparency to the beef and livestock sector, the IFA has engaged the economist Jim Power to conduct an independent investigation into a number of important aspects of the sector. They include the impact of changes to the Common Agricultural Policy, CAP; margins along the supply chain; the value derived from all parts of the animal; the cost of production at farm level; a beef price index; factory controlled feedlots and the impact they are having on cattle prices; and the in-specification bonus, among other issues.

The IFA is very clear that a strong live export trade is essential to ensure competition in cattle prices, provide additional market outlets and maintain a balance in the supply to factories. The logjam in the calf export trade this year created major problems for dairy and beef farmers. The problem was related to ferry and lairage difficulties and a lack of action on behalf of the Minister and the Government to recognise and resolve the issues involved. We strongly believe Ireland needs a live export trade with the capacity to export at least 400,000 animals annually. It is essential that the Government take action immediately to break the logjam. We do not want to have to face the same issues next year as we did this year. We, therefore, recommend that the Government and the Department establish a dedicated section to deal with live exports, with high level expertise, and put significant additional resources into supporting and developing the live export trade to maximise its full potential.

The excessive power of retailers and processors in the supply chain must be addressed. Farmers cannot continue to produce at below the cost of production. With an average retail price of €8.90 per kg in our main export market in the United Kingdom and a similar retail price in the Irish market, the IFA believes there is more than adequate scope in the overall market return for retailers and factories to pay a higher price to farmers, without increasing the priice of beef for the consumer. It is also clear that there is a very unfair divide of the price achieved across the food chain.

The IFA has welcomed the initiative of the European Commission in prioritising the imbalance in the food supply chain and recognising the vulnerability of producers. The introduction of a minimum common standard of protection across member states is welcome, but it is only a first step. The situation where processors and retailers always make a margin, while farmers are sometimes forced to produce at or below the cost of production, is unacceptable. We have also called for greater transparency in the market at all levels of the food chain in order that the margins and profitability of processors and retailers are clearly visible. The IFA is demanding a fairer distribution of the price returns across the beef supply chain.

Mainly as a result of the uncertainty surrounding Brexit and its impact on sterling, cattle prices are down by 20 to 25 cent per kilogram on last year's levels, or up to €100 per head, particularly for steers and heifers. Winter finishers selling young bulls have endured price cuts of over €200 per head. Farmers selling cattle at the current low base price levels of €3.70 per kg for steers and €3.80 per kg for heifers are shipping major financial losses, with some facing financial ruin.

Irish beef exports to the UK market reached 298,000 tonnes, or 52% of all beef exports last year. In addition, the United Kingdom is the market with the highest prices for Irish beef exports.

In the event that there is a no deal or a hard Brexit and there is the imposition of import tariffs, the impact on the beef sector and Irish farming will be devastating. We have made proposals to the Government and the European Commission on the need to introduce a comprehensive package of market supports and direct aid for farmers from the European Union to mitigate the impact of a bad Brexit and losses already incurred. We have calculated that beef farmers have already incurred losses of more than €100 million in the autumn to spring period, from October to the present day. Based on an IFA analysis which compares pre-Brexit prices in 2015 with those in the autumn of 2018 and the winter 2018-spring 2019 period and the numbers of cattle sold, farmers are down €100 million. They are also carrying the additional cost of feed. We have put this to the Minister for Agriculture, Food and the Marine, Deputy Creed, and are requesting the support of the committee for our case. We have written once again today to Commissioner Hogan and the Minister about the issue.

On direct payments and the Common Agricultural Policy, I have highlighted the importance of direct payments to farmers. The current proposals provide for a cut of 5% in nominal terms in the CAP budget. In Ireland that would mean a loss of €97 million, which is totally unacceptable. When the 2% EU proxy rate of inflation is applied, the real figure for Ireland would amount to 17%, or €246 million per year. The IFA is insisting that the CAP budget be increased to take account of inflation and compensate farmers for additional requirements placed on them as a result of the reforms. We propose that the CAP budget be rolled over as it is critical that a budget be in place to avoid linear cuts in direct payments and fully facilitate a seamless transition for farm schemes under Pillar 2.

I will now hand over to my colleague and the livestock chairman Mr. Angus Woods who will bring us through the issues involved in more detail.