Tipperary farming: no confidence in beef price competition controls

Farmers do not believe that there is adequate price competition in the beef sector, according to IFA national livestock chairman Angus Woods.

He made it clear to senior officials in the Competition and Consumer Protection Commission (CCPC) in Dublin that it was their responsibility to guarantee robust competition in the beef processing sector.

“Farmers have seen no evidence from the CCPC that they are prepared to take any action to tackle the competition issue at processing level,” he said.

Mr Woods said developments on mergers in the beef and sheep sectors raised serious concerns for farmers about price competition and increasing the power of processors.

The CCPC is currently considering the merger between Dawn and Dunbia.

“It is the responsibility of the CCPC to carry out a proper and full investigation into this merger and to publish the outcome so that farmers can see what investigative work was carried out and what rationale they use to arrive at their decisions,” said Mr Woods.

He told the CCPC that studies conducted by independent competition consultants pointed to a strong body of evidence that competition in the primary procurement markets for cattle was weak and that additional mergers were likely to weaken competition even further.

Mr Woods said the lack of transparency around market returns, wholesale prices and profits across the meat chain from processing right through to retail level was “unacceptable and impedes competition”.

He called for action at national and EU level to address this issue and pointed to the clear and robust system of transparency in place in the US. Under legislation introduced in the US, meat processors are required to report wholesale prices and stocks twice each day across all beef cuts sold.

Meanwhile, beef production and cattle numbers for the second half of 2017 will be much less that originally forecast, according to Mr Woods, who said this painted a much more positive picture on the beef trade for the remainder of 2017.

There are three key factors impacting to lower beef production and numbers.

For the first six months, the kill is already up 40,000 head; carcass weights are down significantly, which will result in the equivalent of a 30,000 head reduction in numbers, and live exports are running 43,500 head higher than last year.

At the start of the year, Bord Bia forecasted an increase in finished cattle supplies of 100,000 head on 2016. This forecast was based on AIMS data and the combined impact of an increase in calf registrations and a reduction in live exports in 2015 and 2016.

However, the changes due to the increased kill to date, lower carcase weights and the increase in live exports all mean production and numbers for the second half of 2017 will be much lower than originally forecast.

In addition, Mr Woods pointed out that the kill to-date was up 40,000 head and live exports up 43,500 on last year.

While a lot of the increase in live exports are calves, the continuing export of young bulls to Turkey and other markets will take from slaughterings at the back end of this year.

It is estimated that live exports will reduce the kill by 30,000 head. When this is combined with the lower carcase weights and the increased kill to-date, the impact will be that the original forecast of a 100,000 head increase in slaughterings will be completely wiped out, he said.

Some 139,155 animals have been exported with 10,171 head sent to Turkey and a further 1,830 to Libya. In terms of Continental Europe, Angus Woods said 44,701 have been exported to Spain, 41,334 to Holland and 14,289 head to Italy.

Mr Woods also stated that beef prices in our main export market in the UK had risen each week for the last 15 weeks in a row and were now at the equivalent of €4.53/kg.

He said these price increases outweighed any change in the sterling exchange rate.

The IFA livestock leader said the clear message from the recent Beef Forum meeting on the trade was that beef markets were in a strong position and there was no basis for any pressure on cattle prices.

He said IFA has worked hard on live exports, securing the opening up of the important Turkish market and getting some cattle moving to Libya again.

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