Seanad debates
Thursday, 21 January 2016
Commencement Matters
Beef Industry
10:30 am
Pat O'Neill (Fine Gael)
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I welcome the Minister of State, Deputy McHugh. I am disappointed that the Minister for Agriculture, Food and the Marine, Deputy Coveney, is not present. I mean no disrespect to the Minister of State in saying that and I am aware that the Minister is currently speaking in the Dáil, perhaps on the same matter.
I tabled this matter because there is a great deal of concern in the agricultural industry, especially among farmers, who are the primary producers, about the proposed takeover of Slaney Meats by ABP Food Group. Such a development would place the latter in a dominant position in the market and that could be to the detriment of farmers. My matter I tabled asks the Minister whether he feels it would have a positive or negative effect on the future of agriculture in this country and whether he would make a submission to the Competition and Consumer Protection Commission. The commission has been in correspondence with the Joint Oireachtas Committee on Agriculture, Food and the Marine, of which I am a member, on this matter. It said it cannot make a comment until the takeover goes ahead. I am concerned about the timing of the takeover. If it takes place within the next couple of weeks, during a general election, no Oireachtas committee will be able to deal with it. The current Minister for Agriculture, Food and the Marine will be operating in an acting capacity. The takeover may, therefore, proceed without due scrutiny.
In the past couple of years, there have been many problems in the beef industry. Rules on full beef, steer beef, specs and weights were imposed by factories and retailers and these worked to the detriment of the farming community. The Minister for Agriculture, Food and the Marine had to intervene in the sector at different stages because beef was in crisis. He established the beef forum - whether it is working is another question, but at least it was established and it is trying to solve our problems in the beef industry. The beef and sheep sectors, including the export of live cattle and meat, employ nearly 280,000 people in this country. It is important that these sectors have the support of the Minister and the Competition and Consumer Protection Commission so that something like this does not happen.
If the ABP group takes over Slaney Meats, it will have 29% of the beef kill, 40% of the lamb kill and 50% of the rendering plants in the country. A big problem on the previous occasion was the rendering plants because rendering is a by-process which must be done. If the ABP group has 50%, it could lead to a lack of competition.
Following the past year, the price gap between our beef and beef in Britain is now €293 per head. It was €97 per head on average over the past ten years. This is because the factories and the retailers have now applied specifications that live Irish exports cannot be killed and put on the shelves in Britain as British beef. That is why it is important that the Minister intervene to sort out the problem with Northern Ireland at present. We have a big problem in that our beef cannot be sent across the Border to Northern Ireland to be slaughtered and get the Red Tractor standard.
The reason I have raised this matter is that I am worried this will have a detrimental effect. I note the Minister is dealing with it in the Dáil and I am interested to hear his reply. The takeover could be timed to occur when this House, the Dáil and the Oireachtas joint committee are at their least effective. It is important that we keep an eye on it and that the Competition and Consumer Protection Commission intervenes to ensure that agriculture is not ignored. Livelihoods are at stake here if this goes ahead and is not dealt with properly.
I am interested to hear the Minister of State's reply. I know he will pass on what I have said to the Minister, who, I suppose, can also see it in the Official Report. I note the Minister is dealing with it.
Joe McHugh (Donegal North East, Fine Gael)
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I thank Senator O'Neill for raising this matter. It shows that the Senator's ear is to the ground because in my constituency in Donegal it is very much a concern in the farming community, not only regarding this proposed takeover, but in general regarding the price of beef in the factories. When Senator O'Neill's colleague beside him, Senator Comiskey, and I meet, we talk about that significant challenge in relation to price.
The Minister apologises that he cannot be here. Not alone will this go into the Official Report, but the Ministers and the officials will be listening to the Senator's contribution.
With regard to the proposed takeover raised by the Senator, there is a well established independent regulatory process involved in the assessment of such takeovers. This is to ensure that consumers, other businesses or, indeed, agriculture in Ireland does not suffer or that the proposed takeover does not lead to a reduction in competition in any individual sector. As the Minister for Agriculture, Food and the Marine, has stated, neither he nor any other Minister has any function in the process of assessing company mergers in Ireland.
The State, through the Competition and Consumer Protection Commission, has an existing and well established infrastructure for the assessment of mergers and acquisitions of business organisations generally. As part of this assessment, the Competition and Consumer Protection Commission examines any proposed merger or acquisition involving business organisations to ensure there is no substantial lessening of competition.
However, in situations where a proposed merger or acquisition breaches certain thresholds, the matter must be notified directly to the EU Commission. In such situations, my understanding is that the EU Commission itself may investigate the takeover or refer the matter back to the Irish authorities depending on the circumstances of the situation. As part of this process, the investigation of the proposed takeover will involve either a one or two stage investigation by the relevant authorities. At the end of the process, a number of outcomes are possible, including that the authorities may unconditionally clear the merger, approve the merger subject to remedies or prohibit the merger if no adequate remedies to the competition concerns have been proposed by the merging parties.
The structure of the Irish beef processing sector has been the subject of much discussion over the years and one of the recurring themes has been the question of rationalisation in the processing industry to improve its efficiency. However, it is clear that any such rationalisation must avoid distorting competition within the sector. That is why the process of examining this particular proposed takeover is of utmost importance. The process of the investigation by the relevant authorities is a detailed and robust one. Furthermore, the process is a transparent one, with, if this matter is notified to the EU Commission, details of any new notifications being published on the Commission's competition website. This will allow any interested parties to contact the Commission and to submit comments on the merger. There are also timelines laid down for the completion of the different stages of the investigation to ensure that the investigation is completed in as timely a manner as possible for the sake of all parties.
The Minister is very conscious of the need for competition in the beef sector and other sectors in Ireland. I also emphasise that in addition to the number of meat processors, competition in the marketplace is dependent on a number of factors, including the number of markets available for sellers of Irish beef to place their product on and, of course, as Senator O'Neill said, a vibrant live export trade.
Live exports are an important means of providing alternative market outlets for cattle farmers in Ireland, thereby increasing the level of competition surrounding the purchasing of cattle. While 2015 was challenging in terms of live exports due to, for example, political difficulties in North Africa and new veterinary requirements regarding IBR in Belgium, it should be noted that increased domestic prices also contributed to a reduction in live exports for the year to 180,000 head, which was down from 2014.
It is expected that 2016 will see an increase in the export of live cattle due to the improving economic situations in other countries, such as Italy and Spain, which have traditionally provided an outlet for the export of Irish cattle. Additionally, there are currently three dedicated and three roll-on-roll off vessels approved for the carriage of livestock by sea from Irish ports and three more vessels are currently at various stages of the process for similar approval.
On a more general note, and entirely independently of this proposed merger, it is widely accepted that there are imbalances in the relative power of primary producers compared to other operators along the supply chain. With this in mind, the Minister is finalising regulations for the recognition of producer groups in the beef sector in order to permit farmers to benefit from the advantage of scale when it comes to selling their produce or purchasing inputs. I am sure this proposal had its genesis within the beef discussion group which Senator O'Neill mentioned earlier.
It is in the interest of all stakeholders in the Irish beef industry that there is healthy competition at all stages of production to ensure that the future of Irish agriculture is a positive one which allows the industry and the Irish beef sector to continue to grow in a sustainable manner. I am satisfied that the regulatory process for the assessment of mergers are in place and will ensure a thorough and independent assessment of the impact of the proposed takeover, having regard to the requirements of competition law.
Pat O'Neill (Fine Gael)
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I thank the Minister of State, Deputy McHugh, for the reply on behalf of the Minister for Agriculture, Food and the Marine.
The Minister of State mentioned that live exports are down this year, which is not a good development, and he predicts that they will be up next year. One must bear in mind that over 50% of the live exports from this country are female dairy exports which does not help the beef sector, for example, the steers, because that is what one needs to get out. I encourage the Minister and other Departments, for example, the Department of Foreign Affairs and Trade, to continue liaising with the countries, such as Turkey and Libya, so that we can try to export live cattle because it is important that there is competition in the market.
The Minister of State said that mergers go through the relevant bodies, such as the Competition and Consumer Protection Commission and also the European Commission, but it is important that the Minister shows a lead here because he represents the primary producer. He is not here to represent the meat factories or those involved in the meat industry. He is here to represent over 140,000 farmers, 100,000 of whom are involved in beef production. It is important that whoever is the Minister in the next Government, whether it is the Minister, Deputy Coveney, or someone else, makes a submission to the Competition and Consumer Protection Commission and to the Commission. If there is the weight of a Minister behind one, it adds credence to the worries of people. It is important no matter what. Regardless of whether the Minister thinks he can, it is important that he does so because the weight of a Minister on such a submission will help to ensure that the farmers of this country are not be ripped off by somebody getting a dominant share in the market.
Before I conclude, I forgot to welcome Mr. John Bambrick, who is chairman of Kilkenny IFA.I thank him for coming to the House to take this debate. He is a former neighbour of mine. We used to live on the same road until he got a bit richer and moved on. He is very welcome.
Joe McHugh (Donegal North East, Fine Gael)
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It is good that the Senator is raising this matter today, particularly as he is articulating grave concerns. There was a lobbying session by the IFA a couple of weeks ago and the matter is very much on its radar. The Minister cannot refer anything to the Commission until the merger happens. Prior to the latter taking place, the Senator is raising the matter publicly, creating awareness and notifying the Minister. There is a robust process to go through if there are concerns. It is obviously that the Senator has concerns at this early stage. If the merger were to happen, there are mechanisms in place, through both the Competition and Consumer Protection Commission and the European Commission. That is a mechanism that is open to the Minister. It is important that the matter is raised. Every farmer who is involved in the beef industry has grave concerns in respect of this matter. They are articulating that and the Senator has added value by raising the issue publicly today.