Factories and farmers unite

Pressures on agriculture have forged a new alliance writes Seán MacConnell

In 2000 Irish beef farmers and the Irish meat plants became involved in a very bitter dispute over the prices farmers were receiving for their beef cattle.

The matter ended in the courts. The Irish Farmers' Association had to pay heavy fines for blockading the factories. The meat companies were forced to up their prices and an uneasy peace prevailed.

For the last 18 months, the IFA and Meat Industry Ireland, representing the meat plants, have forgotten the past and together are attempting to constructively regularise the beef industry which is worth nearly €1 billion in export terms annually.

The major changes in agriculture brought about by the mid- term review of the Common Agricultural Policy, increasing amounts of South American cheap imports and the threat from globalisation in the World Trade Organisation has given common cause to factory owner and farmer.

Ireland has a natural advantage in the production of beef. We can produce it cheaply and we can produce it better than anyone else in Europe, but external forces are putting grave pressure on the sector.

Producing beef cattle fits neatly into part-time operations. Unlike dairying, where cows have to be milked twice a day 365 days a year, beef animals require less input and the system can be managed with an off-farm job.

But between 2004 and last year, 2,000 farmers have given up producing beef altogether, not because they cannot do it, but because they believe they are not getting the returns from it that would make it worthwhile.

There are 93,000 beef breeding herds in the country, but the majority of these operators are very small and run less than 20 breeding cows in their herds and the best guesstimate is that there are 70,000 farmers, most of them part-timers, providing the raw material to the industry. They normally breed their own stock, and sell them on to larger operators which fatten them for the factories.

The problem for the industry is that because returns are so tight on "finishing" animals for the factories, the number of so-called finishers has dropped down to just over 5,000 specialist farmers. The top "finishers" in the country, according to figures released recently by the European Commission, are the meat plants themselves. The biggest operator in the finishing business is Larry Goodman and Kepak is the second-largest finisher of beef.

But even the Goodman and Kepak operations are tiny compared with the German, Dutch and British operators involved in beef production.

The factories and the farmers are attempting to work out a position where there will be enough profit in both farming and processing beef for them both to survive and they are devising a strategy to defeat the growing threat of imports of beef from South America.

Because of the economy of scale, the South American countries, particularly Brazil, are able to put prime cuts of beef into the European market, paying a full tariff and still making a profit.

While less than 14,000 tonnes of South American beef made its way into Ireland last year, it has displaced Irish beef on the prime European markets where we sell most of the 500,000 tonnes we produce for export. Should Europe be forced to allow more of this beef in, both the Irish and French beef industries face a situation where local factories would probably end up making burgers out of old cows and bull calves from the dairy industry.

Both factories and farmers have been pointing out that imported beef is being treated with hormones, which are banned here in Europe, and that the same traceability and other standards do not apply. They want an even playing pitch.

There is no doubt Irish beef can now be confidently marketed as the cleanest and best in Europe since the "Angel Dusters" of the 1990s were driven out of business and the controls on BSE and veterinary medicines and animal movements are so tight. Given the industry, which includes the farmer producers and the factories, employs almost 150,000 people either directly or indirectly, and given the Irish taxpayer has put major investments into both sectors, it is of interest to us all that we retain a vibrant beef sector.