Beef dispute turns logic, economics upside down

I arrived home from foreign parts in the middle of the week to be confronted by the most confusing of disputes

I arrived home from foreign parts in the middle of the week to be confronted by the most confusing of disputes. The basic rules of mathematics, economics and logic seem to have been inverted, perverted or just averted. The only thing that hasn't surprised me is that the Taoiseach described the situation as "complicated".

Maths first. Central to the dispute is the price of beef. As anyone who does the shopping is aware, we have the second most expensive beef in the EU but the farmers are paid close to the worst prices for their cattle in the EU. So, obviously, someone is making a fair sum somewhere along the line by way of mark-up. It doesn't seem to be the farmers. They claim to be selling their cattle at either break-even or a loss. Whether or which, the money they are being paid does not reflect itself in the price to the consumer.

So it must be the meat processors. Apparently not. They maintain they aren't making enormous profits, though their annually published accounts indicate they certainly aren't starving. In fact, they point the finger in the direction of the retailers.

Now there are, broadly, two breeds of retailer involved in getting beef to the public. The butchers and the supermarkets. Are the family butchers getting rich on the beef trade? They say they don't make that much profit and point to the number of butchers going out of business. They claim the lower prices and convenience of buying beef at the supermarkets is the cause of their shops closing.

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I haven't spotted anything being said by the supermarkets but, if they are pricing the sole-trader butchers out of the market, surely they can't be responsible for the mark-up?

So clearly, if everyone is to be believed, no one is making money out of either producing, processing or selling beef. Which makes one wonder where the money for all the new four-wheel drive vehicles is coming from. Maybe they were Christmas presents from grateful consumers to all concerned for running such an altruistic industry.

Economics. Farmers want more money for their cattle. They claim there's a cartel in operation fixing the price. Normally when a producer has a product they wish to sell they offer it to a purchaser for a price that includes a profit. If the purchaser does not wish to pay that price no sale occurs.

Now, even if there was a cartel in place the meat processors need beef. The farmers have their own association and through it they should have been able to agree a minimum economically viable price and insist that they get paid that sum.

In such a situation the meat processors either agree to the price or buy no beef. Except that for the last couple of years, apparently, the meat processors have been paying a price that allows the farmers no leeway for profit and the farmers have been taking it. Finally, following what looks like an extremely cheeky attempt by the meat processors to pass on a veterinary expense to the farmers, they lost their temper.

A further economic anomaly occurred on Thursday. Reports appeared that the smaller meat processors were willing to offer the required sum while the larger ones weren't. Given that the larger processors are able to take advantage of economies of scale they should have more leeway price-wise. One would expect the larger firms to give in first and the smaller operators to complain bitterly.

Maybe the little guys have just decided to enter into the illogical spirit of the whole dispute. The law, in the person of Mr Justice O'Donovan, certainly seems to have. Early in this conflict he was widely described as playing a blinder. Quite rightly he placed an injunction on the Irish Farmers Association on account of its illegal pickets at the meat processing plants. A fine of £100,000 a day was imposed on the association. When it became apparent that the IFA was willing to pay that much in order to reap the PR benefits of having farmers stand outside the plants, he upped it to £500,000.

This seemed to have the desired effect. The IFA ceased its picketing and paid up what it owed. Widespread resignations followed but the farmers didn't want to stop picketing even though the IFA had told them to. So they stayed where they were, doing the usual chanting and looking disgruntled.

Now Mr Justice O'Donovan started to get ratty. He warned the meat processors that he would lift the injunction if they didn't make some effort to enforce it.

Specifically, this meant attempting to prosecute the farmers. Sensibly enough the meat processors didn't. Such an action would have ensured they would be wearing the bad guys' black hats if they weren't already. So the judge lifted the injunction. And, of course, we have the IFA or what should probably now be called the "Continuity IFA".

Tom Parlon has, throughout the course of the dispute, changed radically. Before it all started he was no more than an adequate performer in media terms and, as head of the IFA, should have dealt with this problem when it arose rather than waiting for it to explode.

Once the dispute started, he led his association into picketing and cost it £500,000 it couldn't afford. Then in the face of the increased fines he capitulated, called off the picketing and resigned along with most of the organisation's leadership. So in keeping with the bizarre rationale of the dispute, he is suddenly a charismatic leader assured of being re-elected by the farmers. He is so popular that, even though he has no right to be there whatsoever, his position at the negotiating table with the meat processors is - pardon the expression - not negotiable.

Public relations "law" has also been trampled on. There is a general PR rule that if you lay off over 100 people it will be covered by the national media. If you can keep the numbers below that figure it will typically turn into a short-lived local media event. During this dispute thousands of workers at the meat plants have been sent home - no work for them to do and no money coming in. And they have dropped off the media radar completely.

Thousands of households suffering from the customary post-festive season lack of cash have found themselves in even worse financial trouble. But their story is probably too straightforward to be covered when every other group involved is behaving so strangely. They seem to be suffering from the ancient Chinese curse: "May you live in interesting times."