Seanad debates

Thursday, 21 October 2004

1:00 pm

Photo of Michael AhernMichael Ahern (Cork East, Fianna Fail)

On behalf of the Minister for Agriculture and Food, Deputy Coughlan, I thank Senator Finucane for raising this matter.

The dispute between Castlemahon Food Products Limited and some of its poultry suppliers concerns the price paid by the company to the growers of the birds. The practice in the poultry industry is that the processor supplies day-old chicks and feed to the producer and also covers certain other costs. The producer provides the labour and other overheads, such as electricity. A price per bird is paid to the producer and this can of course vary from processor to processor.

In the Castlemahon case, the producers involved in the protest are claiming the price being paid by the company is insufficient to cover their costs and are seeking an increase. The price paid for finished broilers is a commercial matter for negotiation and agreement between producers and processors. There is no question of involvement by the Department of Agriculture and Food or European Union institutions in the fixing of these prices, as there is a free market in the sale of poultry.

The picketing of the plant has ceased, which is a welcome development. The Minister urges both sides to again consider all the issues surrounding this dispute and to work towards a resolution that is satisfactory to those concerned.

Interruptions to the supply chain, and any form of disruption of the smooth operation of a business, do not serve the sector well. This is particularly true for poultry, where there is an elaborate network of breeding farms, hatcheries, rearing farms and processors involved in the finished product. A dispute anywhere along the supply chain can have widespread repercussions. It is vital to such an industry that the integrated nature of the producer-processor relationship is recognised as being of fundamental importance to the future success of the industry. It is important that margins be available for all parts of the industry, both at production and processing level, and that quality of product be encouraged and rewarded.

Castlemahon is a major poultry processor. It is vital to the west Limerick economy and the rural economy, both in terms of the considerable level of employment at the processing plant and the contribution to the incomes of poultry growers in the area. There is also a strong cross-Border dimension to the Castlemahon corporate structure and business operations, which is very welcome.

While the issues between Castlemahon management and their producers are matters that relate to the commercial operations of the company, it is in the interest of all concerned to ensure there is no resultant disruption to the level of poultry supplies in the country as a whole. The Minister is concerned that any lost market share may fall into the hands of importers and risk a more permanent loss to the indigenous industry.

The poultry and egg sector is an important part of the overall agrifood industry. The sector has a farm gate value of €150 million and provides valuable employment throughout the country, supplying quality products to the domestic and export markets.

Last year 66 million chickens and 10 million birds of other species were slaughtered in Ireland, maintaining a high level continuity of production in the face of increased competition from imported products. Despite increased import penetration, the poultry sector is a net exporter. Taking into account the valuable processed products sector, the poultry sector out-performed imports by 22,000 tonnes last year and contributed some €244 million to our balance of payments.

Increasingly the industry here, in common with other sectors, must continually face up to the pressures of severe price competition to lower cost producers from abroad. This is a fact of international trade. Its implications are felt right across the chain, where costs of production are constantly scrutinised and must be kept tightly under control.

Higher costs of feed, compliance costs associated with welfare and environmental legislation, economies at slaughter level and downward price pressure from the retail sector are major factors impacting on the poultry industry. While the retail sector is dominated by Irish-produced poultry, all other aspects of the business at catering and wholesale levels are mostly supplied by imported product. There is strong competition right across the EU and in other countries at this level of trade and Irish processors have performed extremely well in maintaining their strong share of the domestic retail market while these competitive pressures grow.

The Minister for Agriculture and Food will urge both sides to consider again how they might find a compromise that will continue to bring economic benefits to the entire poultry chain and, in so doing, demonstrate the industry's capacity to respond effectively to the wider competitive challenges in the market.

Comments

No comments

Log in or join to post a public comment.