Strategic review of beef sector due by end of April
McKinsey consultants are expected to complete a detailed strategic review of the beef industry by the end of April, which Forbairt hopes will form a blueprint for the future development of the sector. McKinsey was awarded the £300,000 contract, following a competition involving five major international consultancy firms.
The McKinsey team has been asked to look at how the competitiveness of the sector can be improved, examining all areas of beef production from the farm to the sale of products on the international market. The study is taking place against the backdrop of CAP reform and the impact of BSE on consumer demand, which, in many markets, has led to resistance to imported products.
The consultants are working with Forbairt, the agency responsible for the development of the indigenous sector. They have already consulted the major farm organisations involved in the beef sector - the Irish Farmers' Association and the Irish Cattle Traders' and Stockowners Association - and are working with An Bord Bia and Teagasc. A detailed study on the cost structure of the beef industry is also underway, in consultation with beef companies.
According to Mr Derek Breen, Forbairt manager for sectoral development, the focus of the McKinsey study will be on practical steps which show a clear return in terms of improved profitability in the sector rather than on "pious aspirations". The consultants will look at a range of issues ranging from farm production to quality control, production and marketing.
The study will also examine the case for rationalisation in the sector. There are 37 export licensed plants in the Republic, with about 20 owners, and the industry is affected by over-capacity. Falling EU support and the BSE difficulties have reduced industry profit margins and also cut the return to farmers.
One role model which the consultants will examine is the Dutch beef sector, where the number of factories has been reduced from 25 in 1995 to around 17 now as part of a government-led strategy to increase scale and improve competitiveness.