Dáil debates

Tuesday, 18 February 2014

6:35 pm

Photo of Michael McNamaraMichael McNamara (Clare, Labour)
Link to this: Individually | In context | Oireachtas source

In responding to the previous Topical Issue, Minister discussed the precarious existence of fishermen. I take this opportunity to draw attention to the increasingly precarious existence of Irish farmers due to prices. The volatility of milk prices has been well ventilated but we are also seeing great volatility in beef prices, particularly bull beef prices. I discussed this issue over the weekend with Deputy Ann Phelan, who wanted to partake in the present discussion but unfortunately had to attend another meeting.

I understand the Minister recently met representatives of the IFA to discuss this issue. As he will be aware, the price for bull beef has fallen by €150 to €250 per head since feeding started this year. This is now beginning to have an impact on beef prices more generally. The number of livestock killed per week currently stands at approximately 31,000, and we are edging towards the targets set out in Food Harvest 2020, but two years ago when the targets were being set, farmers did their part by retaining bulls, including Friesian bulls, and meeting the cost of feeding them. They are now paying the price, however, because they are losing money on every head of livestock they hold. This calls into question some of the general targets in Food Harvest 2020. If the result of increasing our beef kill to 31,000 per week is a fall in prices, farmers will be worse off as a result of ramping up production.

I should point out that I am a farmer. I finish cattle, although I am not a winter finisher. The prices obtained in September for cattle finished on grass were higher than the prices beef farmers are now getting for finished steers. As the Minister will be aware, the cost of finishing cattle in the winter is much higher. Farmers are taking losses on cattle they are finishing. I realise there are no easy answers to this problem. The factories will say there is no market for all of the bull beef produced, but farmers were encouraged to finish these bulls. If there is no market, it raises the question of why they were encouraged to finish them. Over time greater efforts will be needed to find markets for these bulls, but in the short term I encourage the Minister to call a meeting of producers, the IFA and the factories to see what can be done to ensure the ongoing viability of the beef sector. Farmers took losses across the board last year. We had an excellent summer but last winter was difficult. Farmers cannot take another winter of losses without the beef sector being damaged.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank Deputy McNamara for raising this important issue. I spent considerable time discussing the issue with the IFA this afternoon. The value of Irish beef exports was estimated at almost €2.1 billion in 2013. This export performance, which was based on a wide portfolio of customers, has contributed significantly to higher returns for Irish beef in recent years and reflects the success of Bord Bia's marketing strategy and its focus on the key attributes of Irish beef, namely, environmental sustainability, grass-based production systems, full traceability, quality assurance at all stages of production and superior eating quality. I am committed to developing a policy framework that fosters innovation and promotes efficiency and improved performance at all levels of the beef supply chain.

Aggregate cattle supplies at Department-approved meat plants to early February 2014 are up 7% on the corresponding period in 2013, with strong increases recorded in the steer, heifer and cull cow categories. This higher throughput has led to factories giving preference to certain types of stock that are better suited to the requirements of their retail customers.

Prices for prime steers and heifers have remained relatively stable but the young bull trade is challenging at present as age and weight issues continue to affect demand. However, I note that the young bull kill increased by 60% between week one and week six of 2014. The Irish beef sector is hugely dependent on exports and needs to ensure that it is producing efficiently for overseas markets.

One of the main difficulties in marketing young bulls older than 16 months is that these animals are outside the specifications preferred by the UK market. This is a major disadvantage at present because the UK market has effectively become the highest-priced beef market in the EU and it is where we sell most of our beef.

Delays in young bull slaughtering undoubtedly put pressure on producer profit margins but neither I nor any agriculture Minister can interfere in a trade that is cyclical in nature and prone to short-term price fluctuations. Of course, I am entirely sympathetic to those farmers facing difficulties in getting their cattle slaughtered at a price that will allow them any margin at all. In our discussions today, I gave a commitment to ask the CEOs of the meat companies concerned to come into the Department to have a blunt conversation to find a way forward that farmers can accept as fair and that factories can maintain an acceptable margin on, and I hope to do that within the next day or two.

It is the responsibility of the industry - in the first instance, processors and farmers working together - to manage the type and volume of cattle being brought to market so that the supply chain operates for the benefit of both parties and does not undermine the viability of bull beef production systems for either winter finishers or suckler farmers. I understand that producer and meat processor representatives have recently engaged in dialogue with some initial progress being made, but I can vouch for the fact that there is much more progress required in this area.

I fully recognise that we need to maintain confidence in the beef sector and earlier this month I announced the operational details of an investment package worth up to €40 million to beef farmers in 2014. This package will include €23 million for the beef genomics scheme, €10 million for the beef data programme, €5 million for the beef technology adoption programme and €2 million in residual payments under the suckler cow welfare scheme. That being said, we have a genuine problem in the bull beef sector which is now translating into a problem in steer beef and heifer beef also. Producers, that is, farmers, are growing ever more frustrated by this. I will do what I can to assist in the process but, ultimately, both parties concerned will have to find an acceptable solution moving forward.

6:45 pm

Photo of Michael McNamaraMichael McNamara (Clare, Labour)
Link to this: Individually | In context | Oireachtas source

I greatly welcome the fact that the Minister acknowledges there is a problem and that he will do what he can. He mentioned that there was an increase in bull beef killed in the first weeks of this year but no doubt part of the reason for that was that, normally, beef prices increase in the run in to Christmas, this year they did not and many farmers were holding on in the hope that the prices would inevitably increase although they still have not done so. The factories are aware there is a glut out there and they intend to take advantage of it. That is one side of the coin.

The State has consistently stepped up to protect the sector because it is hugely important, and a facet of that sector is the factories. When the factories were in trouble last year with the horses, we stepped up. The Dáil was reconvened during the summer to protect one group which now enjoys a dangerously dominant position in beef, both here and in the United Kingdom, which is a considerable market.

The Minister mentioned that retailers are not interested in this type of beef, and that is true. The unhealthy power that retailers, particularly the large multiples, enjoy is something that we have worked on in the Joint Committee on Agriculture, Food and the Marine. I note Deputies Doyle and Deering here today and we all put a great deal of work into that. Not surprisingly, there has been a certain backlash from lobbyists and other groups. Those retailers have an unhealthy power to determine and, ultimately, they can decide that they will increase or drop prices whereas farmers have to plan two or three years ahead. As I stated, farmers made plans a year or two years ago to increase bull beef production because they were told that was the thing to do and now they are losing money because of it.

Notwithstanding all of that, I greatly welcome the fact that the Minister is calling in the CEOs of the processors to a meeting. I would ask whether he would consider bringing in a farmers' representative to that meeting as well, if that is feasible.

In the longer term, I would ask is there a way to find markets. I welcome the fact that there is a live trade being opened up through Stena but we need to increase the live trade to third countries outside of the EU. Every calf we export live, if it is exported to European markets, we face as competition to one that we rear in Ireland whereas if we can get them out to third country markets it is a different matter entirely. However, I welcome what the Minister has done.

My last suggestion, which may seem a little silly and many might find funny, applies to all Ministers. There are many of them going abroad. Maybe one item on each of their agendas should be whether there is a market in the state they are visiting for bull beef because, as the Minister stated, it is a particular market. British retailers, in particular, which are important customers for Irish beef, are not interested in it but that does not mean that there cannot be markets somewhere in the world, maybe even in Sochi, for bull beef. Who knows?

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Nobody talks up the beef sector more than I do.

Photo of Michael McNamaraMichael McNamara (Clare, Labour)
Link to this: Individually | In context | Oireachtas source

Absolutely.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Every time I go abroad I talk about beef access.

Photo of Michael McNamaraMichael McNamara (Clare, Labour)
Link to this: Individually | In context | Oireachtas source

I refer to all the other Ministers.

Photo of Simon CoveneySimon Coveney (Cork South Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Last year we got Japan, Lebanon and the Gulf states open. We got live exports to North Africa, which is a difficult market to manage. Even today, I spent half my meeting with the Chinese ambassador talking about beef access into China. In addition, we are pushing to get access into both the United States and Canada this year. We are expanding the spread of beef markets that we can access and we have a mature and street-wise group of companies that can take advantage when those markets open.

I agree with Deputy McNamara. We need to have an alternative outlet for farmers, the primary producers, if they feel they are not getting a fair price from the factories here in Ireland, and that is where live cattle exports come in. However, my preference would be that we would minimise live cattle exports. It needs to be there as an option, but what we want is to be getting a good price here in Ireland and employing people in processing and adding value to meat here before it is exported. That is where the maximum dividend is. As many farmers would say, however, it is important to have a live cattle export trade to keep factories honest.

There is a specific issue around beef prices in the United Kingdom versus Ireland. That is because the UK has become a separate market to the rest of the European Union in terms of prices. Last year we were at 106% of EU beef prices, which is unusual. Up until a couple of years ago, we would have been probably below 95%. Irish beef is selling at a premium across the European Union, above the price of most other European beef. That is not the case in the UK because consumers there are choosing UK beef and are willing to pay more for it. We have a particular issue with that in terms of labelling, etc. This problem is not simply solved by a live cattle export trade to the UK because factories in the UK do not want to kill Irish animals. They want to kill British animals and label them as British beef. They want to import Irish beef and label that as Irish beef. With Irish-reared and British-slaughtered beef there is a confusing message on the label which is not what retailers want. There is an issue here that we are trying to address as best we can. There is also an issue with new restrictions that are being introduced in terms of slaughtering in Northern Ireland of animals that have been reared south of the Border, which is another issue.

On the specifics of the bull beef issue which I accept is a big issue for farmers, 20% of our specialist beef is bull beef and we need to find an outlet for that. I will do what I can to work with the factories to facilitate a more acceptable solution than is currently available for farmers but I cannot perform miracles. There is ultimately a marketplace that decides here what it wants and what it is willing to pay for.