Anger on beef puts pressure on FG

AFTER all the hype about water charges and multi channel deflectors, it may yet be a more traditional issue which gives rural Fine Gael TDs most grief on the campaign trail this year.

To casual observers, news that farmers are complaining bitterly about cattle prices will come as no surprise. But closer inspection confirms that they have a case.

After the traumatic year which followed confirmation from Britain that eating BSE infected beef can kill you, the State's 100 000 livestock farmers could have done without the latest body blows to hit the sector.

On March 26th, the EU Commission implemented the latest in a series of cuts in export refunds - the subsidies paid to exporters for selling to "third countries" where the price is lower than in the EU.

Three days later the "green pound" - the rate at which EU supports are paid to Irish agriculture - was revalued by 2.8 per cent, the third revaluation since November. Each revaluation leaves farmers with less money when the payments from Brussels translate into Irish pounds.

But what really stung farmers last week was the speed with which these reduced supports were passed on by meat factories in the form of lower prices. Price cuts last week of 6p a lb - or £50 a head - have sparked yet another bitter feud between farm organisations and the beef industry.

There is nothing new in farmers and factories quarrelling over prices but this time the farm organisations claim the beef plants have been particularly cynical. They say that factories acted in the knowledge that in mid April farmers face a cut in the EU's winter slaughter premium.

This is a support paid to farmers to encourage them to hold on to cattle through the winter months and have them slaughtered in the spring, thereby relieving the traditional autumn glut at the factories. Industry bosses knew, it is claimed, that they could lower the price last week and farmers could not afford to withhold supplies, knowing the premium would be cut within a fortnight.

It is a claim which is vehemently denied by the chief executive of the Irish Meat Association, Mr John Smith, who says the combination of the export refund cut and green pound revaluation left factories with no option but to deduce the price.

Regardless of who is to blame, the latest price collapse has strengthened the Irish Farmers' Association's resolve to make cattle prices a major issue in the forthcoming election.

Livestock farmers are simply fed up working in an industry where prices can fluctuate at the stroke of an EU bureaucrat's pen.

"This is the only industry where you can get up on Monday morning to find an animal you thought was worth £700 is now worth £50 less because of a decision made in Brussels on Friday evening," says Mr Pat O'Leary, beef committee chairman of the Irish Cattle Traders and Stockowners' Association (ICSA). "You can't run an industry where you have things like that happening."

But happen they do, and cattle farmers, who had enjoyed a boom period as a result of the MacSharry reforms of the EU's agriculture regime, have endured one setback after another since autumn 1995, when the first of a series of export refund cuts was implemented.

That saw the price of cattle fall from £1.08 a lb to just over £1; then came the BSE crisis which brought a further drop to 92p; that in turn was followed by the collapse of live export markets, also attributable to consumer fears over BSE. Last week farmers were getting 80p a lb for animals which had fetched £1.08 a year and a half ago.

In making this dramatic decline an election issue, the IFA - which claims cattle farmers are currently producing animals for an actual loss of up to £60 a head - is targeting no particular party. But a spokesman agreed that Government deputies will get the brunt of members' anger.

In reality it's Fine Gael deputies who can expect most hostility, especially with a Fine Gael Minister presiding over what the IFA sees as a mess.

There is nothing new in farm organisations demanding that the Minister for Agriculture lobby harder in Brussels for an increase in subsidies, specifically in this case a reversal of export refund cuts. But Mr Yates's problems are not confined to getting money out of Brussels. A hand out from his Cabinet colleague Ruairi Quinn would do much to placate farmers.

That's because EU rules allow the Government to pay up to £21 million in compensation to the farmers from various sectors who have been affected by the green pound revaluations. Mr Yates can point to the £45 million he has already secured from Brussels for this purpose. But to date the Department of Finance has declined to sanction such compensation from the Exchequer.

The ICSA's Pat O'Leary has another criticism of Mr Yates. He claims the Minister has failed to get to grips with the beef factories, and in occasionally demanding that they maintain beef prices he has simply indulged in "pious platitudes".

In fairness to the Minister, the issue of factory prices and alleged exploitation of farmers is far from clear cut. Mr Smith, who as chief executive of the IMA acts as a spokesman for the industry, answers claims that last week's price cut was unnecessary point for point.

The farm bodies claim that factories are creaming off higher export refund payments while penalising suppliers for the cut announced at the end of last month. That is because factories normally apply weeks in advance for export refund licences; even when the rate is reduced, they continue to get the higher rate until the orders they have been licensed for are filled.

Mr Smith says that on this occasion most factories, anticipating the green pound revaluation at the end of March, pitched for export refund licences at the beginning of the month. By the time the reduced rate came into effect, they had sold all the beef covered under the old, higher rate.

As 75 to 80 per cent of the cattle currently being slaughtered at factories is bound for non EU markets, where export refunds apply, Mr Smith said the cut had an immediate impact on factory gate prices.

The IFA spokesman claimed that in any election satisfaction or otherwise with cattle prices is a good barometer of the state of rural Ireland.

The water charges issue is still there, although Fine Gael TDs are confident it has been sufficiently defused by the most recent concessions made by the Minister for the Environment. But if they believe that will be enough to guarantee them a relatively trouble free campaign, then the IFA is determined to prove them wrong.