Farm Ireland
Independent.ie

Wednesday 18 January 2017

Massive disadvantages exist in having such a big stock of Irish beef on EU supermarket shelves

John Shirley

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.

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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."

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  • Michael Doran, IFA National Livestock Committee chairman: "I had always believed that such strong presence in the multiples across Europe would be a strength, but now I begin to have concerns that it can be a weakness as well. My concern is the lack of competition in the industry. If we had an international customer or customers taking our beef or live cattle, then the EU buyers would treat us with more respect.

"Earlier this year, I was disappointed that our three main beef players did not make a greater effort to fill the beef contract that was on offer from Turkey. The IFA put a lot of work into bringing that tender about. We saw what the Turkish trade did for prices in Germany and it could have done the same for the dairy bulls in Ireland."

At the heart of this issue is the strength of the supermarket multiples and the desire for a mechanism to give farmers leverage to combat this bullyboy power.

In the absence of Government regulation, the best hope of some fair play for farmers is to bring in competition for our cattle.

The irony is that the potential competition is there at this point in time but is not being harnessed. As a result of a surge in world beef prices, I understand that live cattle from Australia and South America are costing at least €3/kg when landed in North Africa and the Middle East. These cattle are the equivalent of our plain Friesians.

This suggests that live shipping from Ireland could return a price of at least €2/kg liveweight. Why has the trade not resumed? Is there an official reluctance to license the boats? Has the beef factory/supermarket axis the power to stop live exports? If the promised dairy herd expansion takes place, there will be a lot more dairy bred males cattle to be sold.

Twenty years ago, when live shipping to Third World countries was common, the Irish cattle herd was growing and farmers were driving new cars. The beef price of the past two years has seen the beef herd shrink and farmers driving semi-vintage models.

The suspicion that primary farmers are screwed by supermarkets was not lessened by the publication of the latest profits from Tesco. Its €4.3bn profit on a turnover of €68bn would even make a dent on the Irish national debt!

Profits from Tesco's Irish operation are not isolated from the overall figure but I understand that, internally, the Irish operation is known as 'treasure island'.

And despite the difficulties in the Irish economy and the excess of shopping space, the Tesco expansion rages on. I understand that the new Tesco store in Naas is its biggest in Europe.

To add to the injury felt by some, each new multiple opening is accompanied by a fanfare about all the jobs that are being created but there's nothing about all the jobs and small trader livelihoods that are being destroyed.

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