Bord Bia's Aidan Cotter recently referred to potential growth in global meat demand as an opportunity for Ireland.

"Meat will have to be produced and we should be the ones to produce it," the Bord Bia chief executive said.

That may be the case, except that for Irish farmers it is hard to avoid the conclusion that our beef industry is a fiasco.

Let's set out the facts. Beef prices are currently running below 1988 levels; the 2008 Teagasc National Farm Survey shows that Family Farm Income declined by 22pc in real terms from 1995 to 2008, although the level of supports has increased from an average of €5,783 to €17,467 during this period; and direct payments accounted for 47pc of Family Farm Income in 1995 but that had increased to 103pc by 2008 and 183pc on suckler farms.

Evidently, supermarkets and processors have grabbed the benefit of direct income supports for themselves. Increased direct payments to farmers have been used to undermine product price, while consumers see no benefit.

Farmers are told to get competitive. We are all familiar with the meat processors' solution -- blame farmers for paying too much for stores. This is misleading nonsense.

If this country is serious about beef we need to decide very quickly if there is any point to suckling. The future of the cattle sector must be based on profitable weanling prices, driven by competition between exporters and Irish finishers. Finishers, in turn, must receive a beef price for quality grades that will leave them a worthwhile profit as well.

The reality is that sucklers are not making money, and a €40/cow subsidy will not change this. While the National Farm Survey gives the overall picture, closer examination of Teagasc's e-Profit analysis (see table, right) shows what is happening on the top 25pc of committed and efficient suckler farms in the country.

Only the very best can make any profit from suckling. The average profit monitor farmer -- remember these are the top 25pc -- lost close to €100/ha and the bottom one-third lost a whopping €300/ha from suckling.

Even more alarming is the fact that things have got worse this year:

• Beef prices are down 10pc;
• Weanlings are down 7pc, even though weanling price is increasing in Spain (up 19.5pc) and Italy (Charolais up 8.5pc);
• Direct payments have been slashed;
• Fertiliser and feed prices are well down but the actual volume of inputs will be up (due to rain);
• Stocking rates are coming down on all but the driest farms;
• Bank repayments for the Farm Waste Management Scheme will result in much higher fixed costs. Last year, loan balances on full-time suckler farms increased by 70pc. In total, farmers invested €4.5bn on their farms in 2006-2008.

Taking these points on board suggests the average profit monitor farmer could lose €256/ha this year compared to €99/ha in 2008 (fifth column in table), and even the best will show losses. These figures are from committed farmers who are serious about being competitive. Anecdotally, however, many suckler farmers will tell you that it costs up to €500/year to keep a cow in the west, on top of fixed costs. The majority of bull weanlings are making just above €500; heifers much less.

The same lack of profitability applies to finishers. Their inability to compete at marts means quality weanlings are under-priced. Instead of factories suggesting that beef finishers focus on cheaper weanlings/stores, we can only move forward with substantially higher prices.

If the processors' message is that there is no scope for better prices, isn't it time we got this clarified once and for all so that people could stop wasting their time? We could also stop employing public servants whose livelihoods depend on keeping up the pretence that our beef industry is viable.

It's not as if there haven't been enough committees to look at what's required. The problem is that processors don't care once they can find sufficient markets based on the lowest common denominator.

The 10-year-old Beef Task Force and Agri-Food 2010 reports both emphasised the urgency of price differentials between the grades.

"It is particularly important that [the beef processing industry] should place itself in a realistic position to compete for high-grade cattle. This further emphasises the importance of strong price differentials. It is essential that realistic grade pricing is put in place immediately," read the Agri-Food report.

However, 10 years on nothing has been done.

Processors will tell us that low prices are a consequence of market forces. It's hard to swallow this when you consider how much influence processors have. The three main Irish beef operators dominate meat processing in Ireland and Britain, with Larry Goodman's Anglo Irish Beef Processors (AIBP), Anglo Beef Processors (ABP) and associated companies accounting for at least 25pc of capacity across both jurisdictions. Goodman plants, with a turnover well in excess of €1bn, and contracts with major retailers cannot be regarded as being too small to have no market influence.

Irish processors' influence on the British market is a source of frustration for beef farmers there. It looks great to see Irish beef dominating Asda shelves, but can this be classed as progress if it can only be achieved by undercutting English and Welsh suppliers by at least 13pc? British farmers, who have been getting €3.25/kg for R-grade steers, believe this figure is being kept artificially low by Irish imports.

The implication is that Asda and Sainsbury's (both top-four retailers in Britain) can keep retail beef prices down because Irish-owned processors are willing to supply cheap beef. The contraction of beef production across Europe and the restrictions on Brazilian imports suggests that there is no ready alternative now to Irish beef. So why the undercutting?

Irish beef farmers fare even worse compared to Scottish farmers, with our beef prices at least 20pc lower. This is because Scottish beef has been successfully branded and the Irish processors have less clout in the Scottish retail market.

By comparison, efforts to brand Irish beef have failed. For years now, the health benefits of Irish grass- fed beef have been extolled. We listen ad nauseum to various commentators talk up our unique, traceable and naturally produced product.

Sadly, there is still no coherent grasp of what the key essentials of a 'clean, green food island' strategy are and, worse, no real effort to translate such a strategy -- if it existed -- into premium prices. Some days we want to develop our green image, other days we want to import cheap grain to see if we can compete at the bottom of the price barrel.

Again, let's recall what was recommended 10 years ago: "We should build upon the positive consumer response to the eating quality of our beef product and on the green and welfare-friendly image of our extensive production systems. The objective should be to create a clear premium market in the UK and in targeted continental countries, for quality-assured Irish beef," stated the Agri-Food 2010 report developed in March 2000. We got quality assurance alright, but where's the rest of it?

Retailers also have to bear considerable responsibility. While they're keen to demonstrate their Fair Trade credentials for bananas and coffee, they seem to forget that Irish farmers are also surely entitled to 'fair trade'.

It's not that difficult for Larry Goodman and Tesco to work out how little farmers are making from cattle. It's a lot more difficult for farmers to see how much Larry Goodman and Tesco are making. If prices don't improve soon, we won't care.

- Eddie Punch

Irish Independent