Where’s the beef? You need to follow the money

Analysis: Dismissing row between farmers and processors would be a mistake

Livestock farmers at the start of a 48-hour protest about the price of beef to farmers outside Kepak in Clonee, Co Meath, last weekend. Photograph: Alan Betson/The Irish Times

Livestock farmers at the start of a 48-hour protest about the price of beef to farmers outside Kepak in Clonee, Co Meath, last weekend. Photograph: Alan Betson/The Irish Times

 

CONOR POPE, Consumer Affairs Correspondent

It would be easy - and maybe even understandable - for most Irish consumers outside of the farming community to dismiss the current row between beef farmers and the meat processing plants as an irrelevancy.

The tentative agreement reached between the farmers and the processors overnight focussed on complex issues including weight specifications, quality payment systems and dual base pricing systems based on breed, age or weight and while such things matter a great deal to farmers, they do not grab most consumers’ attention.

But they do matter because the row has wide ranging implications for all consumers. At its very root, it has been about control, transparency, fairness and - ultimately - the prices we all have to pay for beef in our supermarkets and in our local butchers.

The three meat processors involved in the dispute - ABP, Kepak and Dawn - are able to go about their business under the radar of most people despite the fact that they control 70 per cent of beef production in the Republic and have an enormous influence on the prices which are paid to farmers and paid by consumers.

At present, Irish farmers are being paid a per kilo price of €3.75 for their beef. According to Teagasc, it costs a farmer €4 per kilo to actually rear the animals for slaughter so farmers are losing money every day something which is clearly unsustainable.

In the UK - where much Irish beef ends up - farmers are being paid substantially more, something which has only fuelled the sense of injustice felt by this State’s farmers. While Irish farmers’ ire is understandable, so too is the inevitability that British farmers will earn more for their beef at home than Irish farmers will earn for a product imported into the UK. The reality is that locally sourced beef - be it in Argentina, Brazil, Britain or Ireland - always comes with a premium attached.

But it is prices paid by Irish processors which is at the centre of the row and it has led to recent blockades of 14 of the country’s largest meat factories by farmers.

The IFA, which represents the beef farmers, has maintained that only a substantial increase in the price for beef will end the dispute. The meat industry had accused farmers of using inaccurate price comparisons with other countries.

While prices are central, when the tentative deal was reached there was no agreement on prices which and in fact prices were taken off the table after a warning from the newly formed Competition and Consumer Protection Commission (CCPC) against straying into price fixing during the negotiations.

This CCPC’s intervention annoyed the IFA bu it is nonethelss welcome as the last thing consumers need is vested interests siting around a table in a closed room talking prices.

What should be on the table now and in the future is transparency - or the absence of it - because that is a real problem.

Last year beef prices hit record highs which has led to an oversupply this year. This has allowed processors to pick and chose and they have opted for younger, arguably leaner animals which is easier to market to consumers.

The producers have pressured farmers to supply them with beef aged 30 months and threatened to impose penalties if beef sold into the plants is aged between 30 and 36 months.

On some levels it is is a curious specification as there is no real difference in the quality of 30 month old and 36 month old beef and major buyers of Irish beef in the UK - including Tesco and McDonalds - do not appear to have any issue taking a slightly older product.

All the to-ing and fro-ing abou the age of the beef and has led some in the industry to suggest that the reason the restrictions have been imposed is to drive down prices in the Republic.

And prices are down. In fact Irish farmers are getting around 10 per cent for their beef than they were 12 months ago despite the fact that retail prices in the Republic are up marginally year on year and prices in the UK - where 50 per cent of Irish beef ends up - are up 6 per cent.

So if consumers are paying more and the farmers are getting less where is the money going?

The big meat producers are privately owned so do not have to publish account and the big retailers do not publish details of their profits in the Republic so answering that question is difficult if not impossible although the suspicion must be that the middle men are profiting at the expense of both the farmers and the consumers which is why the row matters to us all.