All the meat factories in the Republic are losing money, according to the Irish Meat Association, with the scale of the loss varying from factory to factory, depending on their mix of business.
And, IMA director, Mr John Smith, says some companies suggest that the price of cattle for non-EU markets would need to drop by 10p a pound - or about £70 an animal - in order to break even. "All indications are the industry cannot sustain current prices," he says.
This is despite the fact that factories are still operating on old EU export licences which are now expiring; these provided export refunds - EU subsidies to export outside the Community - some 8.5p higher than new licences which are just coming on stream.
The beef industry is seasonal and while meat factories are having problems now, with short working weeks and some groups closing plants in rotation for two-week holidays, the industry did have a very good "back end" last autumn.
Possibly another reason profitability is low at present is that processors, in taking out the new export licences, expected that they would not be allowed 100 per cent of those licences, as is frequently the case. In the event, they received the full amount and need cattle to fill the licences. This beef will go into stocks to be sold on in some months time.
Farmers don't accept that prices paid to them are too high. "The factories must reduce Ireland's dependence on Third Country markets and sell more beef into the higher-priced European market," says Mr Derek Deane, chairman of the Irish Farmers' Association's Livestock Committee. Cattle are making 110p to 120p a pound on the French and Italian markets, he says.
"Cattle supplies are expected to be much tighter for the remainder of the year," Mr Deane says. "We believe this will positively impact on cattle prices. To date, supplies are back 70,000 head and we would expect them to be back a further 150,000 head for the remainder of the year, driven by the live export trade at the moment."
A number of major players have left the beef processing industry in recent times: Kerry Group, Purcell's, Horgan's, Halal, Glanbia and Master Meat Packers being the main ones.
A new report on the meat processing industry has been commissioned by the Tanaiste and Minister for Enterprise, Trade and Employment. This was due to be delivered to Ms Harney last month but is understood to be some six weeks behind schedule.
Following the IFA's blockade of meat plants earlier this year, farmers were guaranteed a price of 90p per pound for O-grade steers - the most common variety produced here. But because of a scarcity of cattle, and the cushioning of the old export licences, that price has now risen to 99p a pound for O grades and £1-plus a pound for R grades. "The markets are not delivering £1 a pound for a Third country-type animal," Mr Smith says.
In the two weeks after the blockade, the price of store cattle rose by around £50 a head and has been continuing to rise, despite warnings from figures like Mr Smith that the likely returns in the autumn will not justify these price increases. He estimates that store cattle prices today are some £200 higher than in January.
And he points out that since December, the European Commission has reduced export refunds by the equivalent of 13.6p a pound. The Commission, however, would argue that the higher value of the US dollar, in which this meat is traded, would compensate for the export refund reductions. This same argument was used for the last cut - in May - of between 20 and 25 per cent.
The reduction in export refunds has had a much more serious impact on Ireland than any other EU state, as we are the largest exporter of beef. "We were first in the firing line," Mr Smith says. For example, France is between 115 and 120 per cent self-sufficient in beef; Ireland is around 1,000 per cent. Without refunds, Mr Smith estimates, on the basis of work done by Professor Seamus Sheehy of UCD, the factories would be buying animals for around 60p per pound.
What's wrong, according to the IMA is that we're over-dependent on Third country markets, because we're not producing the right type of animal for EU markets. "Europe should be our natural home... in reality we're not producing the right kind of product," he says.
And we're producing a commodity, not branded product. But there is also the problem that, in the wake of the BSE scare, there has been a "renationalisation" of beef markets in Europe.
In 1999, some 53 per cent of beef exports went to non-EU markets, with the remainder going to Britain and continental EU markets. Egypt, which took 150,000 tonnes (car-case weight equivalent) was by far the most important of the non-EU markets. Some 70 per cent of steers produced go to these markets.
There are five EU car-case classifications - EUROP - in descending order. Roughly one-fifth of Irish beef production meets the standards of European supermarket buyers, which are the three top car-case classifications. The percentage of steers with poor conformation and excessive fat levels - the Os and Ps - rose from 20 per cent in 1992 to 55 per cent in 1999.
But this should not be taken to suggest we were producing the right breed of animal in 1992: the good conformation/fat mix at that time was accounted for by the use of hormone growth promoters (many then legal, if properly used). Quality has dropped since due, partly, to our reliance on producing beef animals from a mainly dairy-herd cow population, which affects conformation. The fat cover problem relates to feeding programmes, the age of animals at slaughter and, again, the breed.
But, switching to the kinds of animals that suit the EU market is not a panacea for all the industry's ills. Most of our beef is sold as commodity products, but new labelling legislation, which will show the country of origin - and from which the Government wants a derogation - could prove detrimental to sales if consumers only want to eat beef produced in their own country.
