Massive disadvantages exist in having such a big stock of Irish beef on EU supermarket shelves
Published 10/05/2011 | 05:00
Bord Bia tells us that Irish beef now has a presence in more than 70 supermarkets across Europe. Some would say that we have finally made it; that we now occupy our rightful place in the affairs of world beef.
But I ask, is this position a strength or a weakness?
Before you call me a heretic or accuse me of anti-patriotism, I make these points:
- The EU is significantly in beef deficit. It's a sellers market, so it makes sense for retailers to align themselves to a supplier with a large surplus of beef. But does it make sense for the supplier to cede control of his product?
- The supermarket-farmer relationship is akin to the spider and fly syndrome. Spider: "You, fly/farmer come into my web. I will take all you can supply. You will be sure of getting paid but I will fix the price that keeps you barely alive. Also, I will make you jump through a series of traceability and farm assurance hoops that will tie you down with paperwork. When you fulfil all of these, I still retain the right to market the beef under my own label. In effect, you work for me on my terms."
- Across the world, beef prices have soared. Ireland has received very strong Third World enquiries for beef and live cattle, practically none of which have been taken up.
In essence, I ask if the Irish beef industry would be stronger or weaker if there was a strong buyer from outside the EU retailer grouping to create competition and to boost the price of cattle. In the recent past, the price of beef to the Irish farmer has not been sufficient to prevent the decline of the suckler herd.
For the past year, world beef prices have surged to record levels, yet it is only in the past couple of weeks of extreme scarcity that prices to the Irish farmer have lifted.
I sought comment on the strength or weakness issue from two industry leaders.
- Aidan Cotter, MD Bord Bia: "I have no doubt that the European market has been, is and will be the correct focus for our beef exporters. Europe is the best and highest priced outlet for Irish beef. We are fortunate to have it on our doorstep and servicing that market is where our future lies.
"We are not standing still. There are still opportunities within Europe for us to exploit and develop. Our beef exporters are good at forging relationships with caterers and other food service outlets as well as the multiples. Beef carcasses are now broken for various outlets. Customers such as McDonald's are a critical part of the mix.
"There will be niche opportunities outside Europe, but basically we are not competitive in the Middle East against the competition from South America."