The transparency of profit margins in the meat processing supply chain has long been a contentious issue.
Although farmer cooperatives used to own a large number of meat processors, they could not be as successful in the beef sector as they were in the dairy sector.
At farmers’ meetings, accusations are regularly raised that processors are making large profits.
Agriculture Secretary Charlie McConalogue’s announcement that the Office of Fairness and Transparency will open later this year may raise more questions than answers.
The main driver for transparency came from cattle farmers. The type of farming you work in will determine how much impact such an office can have on the price farmers get for their hard work.
Farmers’ initial demand was for a beef regulator with the power to force processors to pay more for beef. This led to calls for a beef ombudsman.
The new office, the minister said, will be the enforcement authority for regulating legislation on unfair trading practices (Unfair Trading Practices).
Former EU Agriculture Commissioner Phil Hogan was responsible for drafting the EU-wide ETV. All previous commissioners have balked at drafting such a law, but Hogan was strong enough to push it through despite many objections.
The unfair trading practices that apply are designed to protect people and businesses who trade with supermarkets. In Brussels, on the other hand, there was a strong lobby from retailers.
However, there aren’t too many beef farmers who sell directly to retailers. Therefore, while the new office may be of benefit to horticultural producers, it will only have a limited impact on beef producers.
Beef processors compete to win supermarket contracts and are very unlikely to file a complaint with an agency that enforces unfair trading practices laws if they hope to win future contracts with the same retailer.
The other obvious limitation for beef is the fact that last year only 15.6 percent of the beef we produced was sold in the domestic market, while 84.4 percent (512,000 tons) was sold in the export markets.
Of the 95,000 tonnes consumed in Ireland, 70 per cent (66,500 tonnes) was sold through retailers, representing just 11 per cent of the total beef produced. The remaining 28,500 t are sold through the local gastronomy.
Covid restrictions have boosted the domestic beef market over the past year. The resumption of international travel and restaurants switching to cheaper meat combined with greater cattle deaths have resulted in lower domestic demand and the need to increase the amount of Irish beef exported this year.
Unless this new office is able to dictate terms and conditions to customers of Irish beef in the EU and beyond, it is misleading Irish beef farmers to say it will improve the prices we receive.
The real challenges for Irish beef are competition from pork and chicken meat and the fact that our beef is in direct competition with locally produced beef in the countries we sell to, along with other imports from around the world.
International trade deals will play a role in the value of the UK beef market for years to come as Australia and New Zealand gain more access to a market where we are currently the importer of choice.
Often, the availability of a new cheaper option is enough to drive down the incumbent’s price, even if no beef from Down Under makes it onto the shelves of UK retailers. The option to buy it creates a strain in the market.
British farmers have campaigned for years to get Irish beef off the shelves of British retailers. Irish beef has similar production costs to British beef and quality assurance meets Red Tractor standards.
The reality of Brexit is that more countries with lower production costs will compete for space on these shelves.
Now is not the time to fool beef farmers about how the beef market works. They face too many other challenges that require vision and leadership.
Angus Woods is a drywall builder in Co Wicklow
https://www.independent.ie/business/farming/comment/beef-farmers-are-being-mis-led-the-office-of-fairness-and-transparency-wont-improve-prices-42055888.html Beef farmers are being misled – the Office for Fairness and Transparency will not improve prices