Farmers accuse processors of using Brexit to lower beef prices
IFA president claims quoted prices failed to reflect current level of demand in market
From left; Larry Murrin, Chief Executive, Dawn Farm Foods (left) says that as a result of the slide in sterling, firms are facing the twin challenges of cost recovery on the one hand and a loss of competiveness on the other. Photograph: Dara Mac Dónaill / The Irish Times
The Irish Farmers’ Association (IFA) has accused beef processors of using Brexit to squeeze farmers on price.
IFA president Joe Healy claimed meat factories were unnecessarily pulling beef prices on the back of the UK’s referendum result, even though they were hedged against currency volatility.
He said farmers were being quoted prices 5-10 cent lower than current market rates, even while demand from UK supermarkets remained strong and slaughter rates here fell, both of which should support prices.
“Farmers should strongly resist the factories’ price cuts, which are unjustified,” Mr Healy said.
“Rather than attempt to exploit the post-referendum situation, they have a responsibility to reflect the strong market conditions in the UK and maximise the return to producers,” he added.
Beef sector exposed
The beef sector is arguably the most exposed to the current post-vote uncertainty hanging over the UK economy with approximately 54 per cent of exports, worth €1.1 billion, going to the UK.
The IFA is also concerned at the level competition that will exist in the processing sector if Larry Goodman’s ABP Group, the largest player in the market, is cleared by competition authorities to take a 50 per cent stake in Slaney Foods.
The move will give ABP control of over more than a quarter of the beef processing industry here.
Processors are, however, facing a calamitous loss of competiiveness as a result of the current depreciation in sterling
Since the referendum result last month, the British pound has dropped in value against the euro by around 15 per cent, bringing it back to 2011 levels, when Britain was mired in financial crisis.
On Thursday, the euro was trading at around 85 pence sterling.
Slide in sterling
Speaking on The Irish Times business podcast, Dawn Foods chief executive Larry Murrin said as a result of the slide in sterling, firms were facing the twin challenges of cost recovery on the one hand and a loss of competiveness on the other.
“This Brexit is unprecedented, the industry has never had to deal with any set of events like it before. We’ve have foot and mouth, we’ve had mad cow, we’ve have dioxin, we’ve have a couple of less major sterling crises but nothing with the potential ripple effects of this,” he said, noting that while some firms were hedged for the next quarter, the effects would be felt sooner or later.
Minister for Agricultur Michael Creed, meanwhile, has welcomed the constructive input of stakeholders and agencies in assessing the challenges ahead following the first meeting of the new Brexit consultative committee .
Mr Creed said the key issue to be dealt with is the exchange rate volatility caused by the uncertain environment.