Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

I thank the Senators for raising this issue. I accept it is a genuine issue. Some of the things said by Senator Byrne are not borne out in the marketplace, but I accept there is a significant issue that the industry must tackle, particularly with regard to bull beef. There is an over-supply of animals that are outside the specification that is predominantly sought by retail supermarkets in the UK. The animals are, in most cases, over 20 months. The market is seeking smaller animals but it is very hard to produce 16 month beef in Ireland on the back of a grass-based system. In fact, it is practically impossible to do it. It requires a much more intensive indoor system, with intensive feeding and high protein diets, to achieve the turnaround in 16 months of an animal that is ready for the factory.

Bull beef of around 16 months is the system that operates in the UK, and there are some people in Ireland who do it, but predominantly the bull beef in Ireland, which is approximately 20% of the overall beef output, is on the back of a grass-based system that is supplemented by protein feeds. As a result, farmers are producing animals which the marketplace is not looking for at present, certainly not to the extent that will give farmers the price they deserve for those animals, because they are good animals. I have a great deal of sympathy for farmers who find themselves in that position, but it is important that we all have an understanding of what the marketplace is seeking, as opposed to trying to force the issue.

I will outline some more general information on the beef sector, because it is important to have it on the record. The beef sector is a key component not only of our agrifood industry but of our economy generally. More than 100,000 farmers are involved in keeping cattle and sheep and approximately 65,000 farmers are engaged in specialist beef farming. Developing this sector has been a clear priority for me since taking office.

Food Harvest 2020 outlines a strategy for the development of Ireland's agrifood industry, including the beef sector. It is the result of a collaborative approach to policy-making and includes a vision for the beef sector developed and agreed by stakeholders, including farm bodies and processors. Subsequently, the beef activation group, chaired by a former Secretary General of my Department, outlined the actions needed to deliver on this vision and outlined a more ambitious target of a 40% increase in the value of beef output, up from the previous 20% in terms of targets. That report makes a number of recommendations relating to improving supply chain relationships, the adoption of genomic technology, improving the calving rate, addressing animal health issues and other initiatives designed to deliver on the Food Harvest 2020 targets.

My clear focus has been and will remain on delivering on the actions necessary to allow the beef sector to deliver on the targets it set for itself in the plan. These actions must be progressive, forward looking and market orientated, building the potential of the sector and improving productivity, profitability and environmental sustainability. I wish to use research, innovation, knowledge transfer and investment capital to improve productivity and profitability in the sector. Using Ireland's clean, green environment and reputation for high standards of quality and safety to build a strong point of differentiation for Irish food on international markets is also a priority. Raising the profile of Ireland as a food island and a supplier of the highest quality beef in new and emerging markets has been a successful policy over the past three years.

It was never the case that the any of targets envisaged in Food Harvest 2020 would remain unchallenged by market or other developments. However, neither is it valid to view the potential to develop the beef sector solely through the prism of current difficulties being experienced by some farmers producing particular categories of stock.

Any objective assessment of the potential of the sector requires consideration of market dynamics over time, and one must also take into account what can be done to provide the kind of public infrastructure that can support the development of the sector into the future. The beef activation group process that I have referred to allowed for a review of progress in regard to the development of the sector, and the chairman of the group is engaged in that process in terms of looking at what we can do to overcome some of the current problems.

Against that background it is worth focusing for a moment on the actions taken by Government to build on the vision in Food Harvest 2020 which, to its credit, was put in place by the previous Government in terms of the start of that process. In January 2014, I announced operational details of an investment package worth up to €40 million for beef farmers. Among the measures in this investment are packages around a €23 million beef genomics scheme, a €10 million beef data transfer programme; €5 million for the beef technology adoption programme, that is, discussion groups, and €2 million that is still being paid related to the previous suckler cow welfare scheme. These announcements are additional to the testing of more than 450,000 calves under the voluntary phase of the BVD programme delivered by Animal Health Ireland, the launch by Bord Bia of the Origin Green programme to develop a brand image for Ireland's food industry and a significant increase in the number of participants in the beef quality assurance programme, a trebling of the number of farmers in the Irish Cattle Breeding Federation, ICBF, HerdPlus programme,; the introduction of a national weight recording service by ICBF in conjunction with the beef technology adoption programme, BTAP, and the extension of the Teagasc-Irish Farmers' Journalbetter farm programme to cover every county in Ireland.

In addition, my Department has published a draft rural development programme for 2014 to 2020 which is under discussion with the European Commission. This will build upon the supports announced in 2014, and I am proposing a number of measures of interest to suckler farmers which include a beef data and genomics measure worth up to €52 million per year for this sector, a substantial new agri-environment-climate scheme, GLAS, which will build on the progress made under the rural environment protection scheme, REPS, and the agri-environment options scheme, AEOS, and will provide significant increased income for up to 50,000 farmers, continued strong support for disadvantaged areas with spending of approximately €195 million per year, incentives for on-farm capital investment for the beef sector as well as other sectors, and a continuation and an addition to the knowledge transfer and innovation measures that have been developed in recent years for the beef sector as well as the sheep and dairy sectors. Suckler farmers will be able to apply for any or all of these measures over the lifetime of the programme as suits their particular enterprises.

I will refer briefly to market developments. As I have mentioned, our beef exports reached €2.1 billion in 2013, which is a great success story from an Irish perspective. Since my appointment as Minister I have been very active in developing relationships in new and expanding international markets for dairy, beef and lamb, raising the profile of Ireland and increasing international confidence in Irish production and control systems. My aim is to provide a platform for long-term trading relationships into the future in these sectors, particularly in new and emerging markets.

Since taking office, I have led trade missions to China, Japan, the United States, Algeria, the Gulf states and countries in the Middle East. My Department engages daily with many countries, in collaboration with Bord Bia and the Irish diplomatic service, on market access issues. These initiatives have led to a number of notable successes in securing agreement on imports from authorities in Japan, Singapore, Egypt and Iran, which provide more options for exporters of Irish beef. As recently as January this year, Lebanon agreed to reopen its market to Irish beef, sheepmeat and cooked meats.

We are making very good progress in regard to the US market also. I was in the US last year meeting the Department of Agriculture Secretary of State, Tom Vilsack. That was a very positive engagement and I hope that in the not too distant future we will be able officially to open beef exports to the US again. Likewise, I am making good progress with China. We are the only country in the world that has a formal working group with China on beef access, and we will continue to push that significantly. We have an ongoing programme in conjunction with and led by Bord Bia around the Origin Green initiative, which again raises the profile and the perceived quality of Irish food.

With regard to the price differential between Irish and UK cattle, which has been a major issue for farmers, a number of factors have been identified to explain why Irish-born cattle command lower prices than their British equivalents. These include a British consumer preference for indigenous product as well as additional transport and processing costs in supplying that market.

I want to refer also to EU beef labelling rules, which require the place of birth, rearing and slaughter to be displayed on consumer packaging. These are well-established, long-standing rules introduced to address consumer demands for transparency regarding the origin of beef. Trade with the UK in beef born, reared and slaughtered in Ireland is strong, and I have not heard any suggestion that rules requiring such beef to be labelled as Irish are regarded as a disadvantage. However, British retailers prefer to market Irish beef separately, that is, as either British or Irish. That is entirely a matter of commercial preference based on their perception of consumer choice. This purchasing strategy clearly means that beef must be sourced from animals originating in one country, that is, born, reared and slaughtered in the same country, and is a disadvantage for farmers rearing animals in Ireland and sending them live to the UK for fattening and-or slaughter.

In addition, logistical difficulties arise when a small number of Irish-born animals are slaughtered in a UK meat plant. Under mandatory EU labelling rules, these carcases have to be deboned in a separate batch, packaged and labelled accordingly, thereby incurring additional costs for the processor. While Bord Bia has repeatedly raised this issue with British retailers over the years, the response from British retailers has been firm and unequivocal. Nevertheless, Bord Bia, in its ongoing interactions with British customers, will continue to pursue all opportunities to maximise the full potential of the beef and livestock trade with our largest trading partner by far when it comes to beef.

In regard to the current difficulties between farmers and processors, the Senators will appreciate that, ultimately, questions of price and market specification are matters to be determined between the purchasers and the sellers of cattle and it is neither appropriate nor possible for me to intervene directly on pricing issues. None the less, I recently met farmer representatives and processors to discuss the current situation. Following that interaction, I have called on factories, in collaboration with the farming bodies, to engage to resolve various issues that have lately caused difficulties for many producers.

At my request, Meat Industry Ireland member companies have kept their livestock offices open to deal with farmers with any particular queries or concerns on the marketing of their stock. Meat Industry Ireland member companies have made available contact details for each of their main plants to enable farmers to contact them directly. I want to make it clear, however, that the days of market intervention are gone. My focus is on developing the potential of the beef industry, and expectations that any Minister with responsibility for agriculture can intervene on price are misplaced. I would not be allowed to do it anyway, even if I wanted to. None the less, the relationship between processors and farmers is a very important one, and obviously I have a role to play in that relationship. Ultimately, both sides must work together to manage the type and volume of cattle being brought to market to ensure the supply chain does not undermine the viability of beef production systems for either winter finishers or suckler farmers.

The current situation clearly underlines the need for industry operators to improve communication on market trends and signals throughout the supply chain and to address supply chain issues in such a context. An industry-led solution to the current uncertainty is essential to restoring confidence in the sector, and I would encourage the various stakeholders to continue their efforts to reach a mutually acceptable outcome.

It is important also to acknowledge market evolution in recent years.

In 2013, the performance of the beef sector in 2013 was strong, with output of over 518,000 tonnes, which was an increase of 5% over 2012. The value of beef exports increased by 10% in the same year. Irish beef prices were 106% of the EU average in 2013 and notwithstanding recent fluctuations remain, on average, relatively strong. The average price change in the first ten weeks of this year is a reduction of approximately 1.8%, which Opposition Senators have described as a market collapse, which is simply not accurate. It must be remembered that this is a common price across many sectors. I acknowledge that we have a fundamental problem in the bull beef market. However, beef across other sectors has seen a slight price reduction, but not a price collapse. That slight price reduction is reflected in other markets across the European Union. There is a specific issue with the price differential between Ireland and the UK and I have explained why that is the case.

I note also that slaughtering of bull beef in the first 11 weeks of 2014 up to the week ending 16 March stood at almost 65,000 head which represented an increased kill of almost 2,000 animals, 3%, over the same period in 2013. The idea that bull animals are not being killed is also not true. While farmers are not getting the price they want for them, approximately 6,000 bulls a week are being slaughtered. I have an assurance that the factories will continue to slaughter bull beef while we deal with the oversupply issues.

In addition, the number of live cattle exported to the end of the week ending 9 March is approximately 42,000 head, an increase of 6% over the same period last year. Farmers have been calling on me to increase live cattle exports to give farmers an option other than selling to the factories because they are not getting a good enough price as they see it from the factories, and we are delivering on that. We have seen live cattle exports increase again this year. Last week, 2,500 bulls were sent to Libya, again trying to deal with the bull beef issue. While undoubtedly there were problems in January when bull beef slaughterings were down 25% on last year, it appears that there has been some progress since then, and currently bull slaughterings are up 3% on the same time last year.

I restate my strong commitment to the development of the beef sector in line with the vision outlined in Food Harvest 2020. It is important to acknowledge the difficulties for some operators, particularly in the early part of this year as well as the vulnerabilities in the sector. Ultimately, the future of the sector will depend on recognition by operators along the supply chain of their mutual interdependence. Clear and early communication of market and specification requirements must be matched by an engagement from primary producers on these issues, but equally there must be recognition that the primary production sector inevitably has a lag between market signals and production response. There are no simple solutions but positive engagement is essential to begin to solve these problems.

In plain English we need to ensure there is an ongoing conversation between farmers, the primary producers of quality product, and the processors who have to find a market for all this product. It must be remembered that we need to export and find a consumer in a market outside Ireland for nearly 90% of our beef. As we face intense competition in many of those markets, we need a processing sector that is active and successful in doing that on the back of the reputation of the Irish beef industry. Farmers need to understand the specifications those markets want. At the moment those markets are steers and heifers, and not bull beef even though it may suit many farmers because of their production facilities to produce bull beef. If farmers are to produce bull beef they need to have an early conversation with factories as to the specification the market requires so that when they deliver them they get the price they expect, as opposed to turning up in the factory with an animal that is 23 or 24 months old and does not meet the specification.

This is not a blame issue and we need to work together. There is a role for me and my Department in ensuring there are a relationship and understanding between farmers and processors so that the market gets what it wants from Ireland and farmers get what they deserve they get in terms of the best prices in Europe because we produce the best beef in Europe, but we need to be producing the best beef to a specification that the market requires.

I obviously cannot support the motion. I do not accept that there has been a collapse in beef prices over the past month. I accept there is a particular problem with bull beef that we are trying to address and will continue to work to try to address through live cattle exports, through working with factories to ensure we get the numbers through, and through working with farmers to try to learn lessons in terms of specifications, etc. I do not agree that processors are refusing to slaughter bulls given that approximately 6,000 bulls a week are being slaughtered. I accept that farmers are not getting the prices that they want, and deserve, having produced very good quality beef. However, there is a genuine market problem with that and we need to learn that lesson.

There is a series of other issues regarding labelling and so on that I simply cannot support. I accept the thrust of the motion that the Opposition wants me, as Minister with political responsibility for this sector, to do everything I can to assist an element within the beef sector - the bull beef sector - that is really feeling the pinch at the moment. I am trying to do everything I can within reason to help those farmers whose income is affected by a marketplace that is not rewarding them for producing the animals they have on farm ready for sale at the moment.

I believe having a beef regulator would send out a terrible signal internationally. If I were to announce that I had so little faith in the beef sector in Ireland that I had to introduce an independent regulator because of some kind of perceived monopolistic situation in the beef sector, it would do enormous damage to the reputation of our industry. It is totally unwarranted and unneeded. We have a great reputation at the moment.

Last year, the price of Irish beef was at 106% of the European average. That means consumers are willing to pay a premium for Irish beef. Five or ten years ago - perhaps even more recently - the average price of Irish beef would certainly have been less than 95% of the EU average; in other words, we were not in the premium category. We have worked hard to get into that category.

We have specific issues we need to address with the UK market and UK retailers. However, the reputation and quality of Irish beef is better than they have ever been. We need to continue on that road rather than second-guessing ourselves by putting in place an independent regulator.

If anybody has any evidence to suggest that cartels are operating in this industry, I want to hear about it and I will act on it. We will send that information to the Competition Authority and it will act on it. Companies such as Kepak, Dawn Meats and ABP operate in a very competitive world with each other and against each other in markets throughout Europe and the world. I encourage anybody with evidence to the contrary to send it on to me and we will act on it. Let us not act on the basis of assumptions because it is popular to kick the factories or whatever.

The industry here is interdependent. Without processing, factories and meat companies, farmers would have no outlet for food they are producing, 90% of which needs to be exported. Without farmers and quality primary producers of beef those companies have no future either. There is an interdependence here where everybody, if one likes, needs to get their pound of flesh in terms of acceptable and reasonable margins. To do that we need to be producing what the market wants and we need to maintain and increase the reputation of the Irish beef sector, which is what I am trying to do.