Ireland has over 6.5 Million cattle, producing 2.2 Million calves annually. This results in almost 1.5 Million cattle being presented for slaughter of which we export almost 90%. Additionally we have approximately 200,000 – 300,000 of live exports. Ireland has always been a provider of cattle for Northern Ireland and the United Kingdom for hundreds of years. As a nation we are only consuming approximately 10% of what we produce and in 2013 Ireland produced over 472,000 tonnes of beef meat for export.
The United Kingdom on the other hand is only approximately 75% self-sufficient in beef meat and must import approximately 350,000 tonnes of additional beef to satisfy national demand. Ireland supplies the vast majority of this imported beef meat as you would expect due to our proximity. In 2013 Ireland produced and exported over 250,000 tonnes of beef meat to the UK representing almost 70% of their total imports.
Over the last number of years our meat processors have introduced what they call a quality bonus payment for cattle that fulfil certain “quality” criteria. This bonus payment now stands at 12 cents/kg which represents an average bonus of €40 to €60 per animal. In effect this is not a bonus payment but a penalty on all the other animals produced by Irish farmers. An integral part of qualifying for this bonus payment is the adherence to Bord Bia Quality Assurance Scheme (QAS) which has many criteria for full eligibility; regarding the trade and movement of animals the QAS states that animals must reside in a quality assured farm for 70 days or more to qualify. Their scheme allows for animals to trade freely between quality assured farms and if the cumulative days an animal resides on such farms amounts to 70 days, then the animal still retains its quality assurance status.
The meat plants however have effectively usurped the Bord Bia Scheme and will only pay “their bonus” if an animal;
has resided 70 days or longer in the last herd
Goes directly to slaughter from that farm to a meat plant.
Have four movements or less in its lifetime.
The effect of these additional conditions by the meat plants is twofold;
Effectively prevents factory fit animals being traded in livestock marts.
The rationale for the meat plants introducing these additional conditions is simple and clear. It is being done to subvert fair competition for livestock and ultimately control prices.
These bonus payments we are informed by the Meat Industry are a customer requirement led by the large British multiples arising from animal welfare concerns. As outlined above, one of the main criteria to enable a farmer to achieve this bonus is having only 4 movements or less in the animal’s lifetime. Due to the structure of the Irish beef sector the smaller farms in the West traditionally supply other farmers in the Midlands and East of Ireland and Northern Ireland farmers with younger store animals. To facilitate this, these animals require several movements on various farms before these cattle are finally finished on the last farm before slaughter.
ICOS believes that this measure along with the other measures introduced by the Meat Industry is a form of market manipulation that ensures that transparent price competition is stifled as much as possible. The Meat Industry and UK multiples are fully aware that by manipulating the market in the manner described, farmers are not getting a fair and true market value for their stock. The UK market is the only European market where these effective barriers to free trade in livestock exist. Ireland is exporting 200,000 tonnes of identical beef meat to Continental Europe without the restrictive stipulations that have been introduced for exports to the UK allegedly for quality and welfare reasons.
ICOS contends that the further interference to the trade that is now evident with the effective ban by meat plants in Northern Ireland on killing cattle from the Republic in Northern meat plants is anti-competitive and in contravention of free trade principles within the EU. The graph below clearly illustrates the effect of this market manipulation and its distortion on Irish beef prices.
ICOS has a first-hand account of this from farmers in Northern Ireland. We are aware of instances of Northern Ireland farmers with large numbers of Southern born cattle that are fit to slaughter who cannot get them killed in the Northern meat plants. One such farmer has told ICOS that he is facing financial ruin as he has over 2000 southern born cattle in his feedlot. For the last 30 years this farmer has purchased his cattle from marts all across the West of Ireland and always killed them in Northern meat plants. He now has been effectively told he cannot get these animals slaughtered in the Northern meat plants unless he takes a £150 discount as they were born in the south of Ireland. This farmer now cannot export these animals back to the southern meat plants as his herd has a movement restriction placed on his herd due to TB regulations (closed slaughter only herd). This policy, if retained, will leave this farmer and many others facing financial ruin.
Typically, these Northern farmers purchased these cattle from the livestock marts in Balla, Ballymote, Mohill, Roscommon, Elphin, Castlerea Ballinasloe, Athenry, Ballyjamesduff, Ennis, Birr, Nenagh and Roscrea, representing a significant amount of trade for these marts but more importantly the local farmers in these areas. Apart from the obvious benefits of having an additional buyer around the ringside the “Northern buyer” effect lifts the entire livestock trade the days these buyers are present as competition for stock heats up. This benefits everyone in the livestock industry and ensures a fair and open price.
A founding principle of the European Union was to ensure free trade between member states by the removal of barriers to trade. The Ireland-UK beef trade is now seeing an effective re-introduction of national barriers to trade. Inaction in this area by the EU and our national government is resulting in the large retailers and Irish owned meat factories exercising undue control over the price of beef.
ICOS has raised these barriers to the free trade of live cattle on numerous occasions at National and EU level only to be informed that the EU requirement on the meat labelling regulation was to blame. This assertion is not accurate as the retailers can easily label beef meat to comply with these regulations when it suits them. ICOS has been informed that the retailers themselves have conducted market research into the purchasing habits of consumers in the United Kingdom and no adverse purchasing habits were demonstrated when the label clearly illustrated the country of birth, finishing and slaughter of animals. The BSE crisis during the mid 1990’s was the impetus for the introduction of regulation 1760/2000 which laid down that compulsory beef labelling be in place before the 1st of January 2002. There is now an urgent need on the part of national government and the EU to review all of the terms and conditions of trade relating to both beef exports and live exports of livestock to the UK with a view to ensuring greater transparency and freer competition. Irish farmers are entitled to get the full value of their stock and not be exploited by questionable market restrictions introduced by meat factories with the support of the large retailers.
On a recent visit to England on this issue ICOS has gathered evidence that Irish beef and British beef is being sold at the same price per kilo in Tesco stores. We photographed 2 identical cuts of brisket beef (pictures attached) one labelled Irish and the other British, both prices were the same at £8.00 per kilo but the Irish farmer had received between 15% and 20% less per kilo for his beef. This equates to almost €200 difference per head. Where did the extra margin go as the UK housewife was not getting any discount for Irish beef over and above British beef?
In Britain over 45% of beef is sold through smaller abattoirs and food service outlets that supply restaurants etc. and these retailers are solely concerned with price and quality. One would think therefore that these outlets would be a real opportunity for Irish born, British finished cattle. Unfortunately not so as these smaller food service abattoirs, while independent rely on some of the bigger Irish owned meat renderers to purchase their offal. Some of these small abattoir owners have indicated to ICOS that these same Irish owned renderers would mysteriously be unable to collect their offal if they killed quantities of Irish born cattle but would have no capacity problems when they were not killing Irish born cattle.
We then met with a number of large UK farmers to discuss potential purchases of Irish cattle in their feedlots. These were farmers who traditionally have purchased and fattened Irish sourced stock. They indicated to ICOS that no Irish owned factory in England will kill Irish born cattle. These farmers had in the past bought thousands of Irish cattle and fattened them in feedlots but now having had so much difficulty getting them killed that these farmers were being effectively forced to cease trading in cattle from Ireland.
ICOS would now call on this Committee to lend its immediate support to addressing the anomalies that have been highlighted in this presentation and ensure that whatever measures necessary are taken urgently to rectify what is a calamitous situation for farmers.