News of Dawn Meats proposed takeover of Dunbia’s operations in the Republic of Ireland has been met with apprehension from some farm organisations.
It was announced yesterday that Dawn Meats had agreed a strategic partnership with Dunbia to establish a majority-owned joint venture in the UK.
This joint venture will comprise of the UK operations of both organisations. In the Republic of Ireland, Dawn Meats will separately acquire Dunbia’s operations.
The deal is subject to approval by the relevant competition authorities.
If this deal receives the green light, Dawn Meats will have nine facilities – including five abattoirs – in the Republic of Ireland.
‘We need more competition in the processing sector’
There won’t be too many farmers impressed with the news of this takeover, according to the Irish Cattle and Sheep Farmers’ Association’s (ICSA) Beef Chairman, Edmond Phelan.
Phelan is very anxious about the further consolidation of the beef trade in the hands of the ‘big three’ – Dawn Meats, Kepak and ABP – following the news that Dawn Meats is to acquire Dunbia.
“This deal will bring a lack of competition in the processing sector. First of all the small abattoirs were forced out of business, now the big players are being swallowed up by the even bigger players.
“We need more competition in the processing sector, not less of it. If not for live exports; farmers could be receiving a price of around €3.50/kg, rather than the €4.10/kg or €4.20/kg they are currently being paid.
Decreasing competition in the meat processing sector is bad news for farmers. This deal will only serve to increase the all-powerful and dominant position of this small circle of players.
“Farmers struggle on a daily basis to get a fair price for their cattle from factories; this is just going to weaken their position even further,” he said.
This deal proves, once again, that the only hope for the beef sector in Ireland is competition between live exports and factories, Phelan added.
The Minister for Agriculture, Food and the Marine, Michael Creed, needs to show more support to the live export trade, to give farmers that added option when selling their cattle, he said.
It is now more apparent than ever that it is the only show in town to deliver badly needed relief to hard pressed cattle farmers.
“The only other hope would be for processors to try to use their increasing dominance to push for higher prices from retailers when beef is scarce, rather than driving down the price paid to farmers when beef is plentiful.
“However, the evidence is factories are increasingly using their own feedlots to undermine independent farmers making a profit,” he said.
‘This deal has both positives and negatives’
Meanwhile, it will take time for it to become clear whether this proposed takeover will be beneficial or detrimental to the prices paid to Irish farmers, the Irish Farmers’ Association’s (IFA) Sheep Chairman, John Lynskey, said.
“There are two ways to look at it; it has both positives and negatives. It is vital that all the processing plants are kept open.
But if a monopoly is created then it could turn into a negative.
Lynskey believes farmers do not want to see a loss of competition in the market; time will tell whether or not this deal will benefit farmers in the long run, he added.
Farm organisations are always concerned about the concentration of ownership within the processing sector, according to the Chairman of the IFA’s National Livestock Committee, Angus Woods.
“Each time you take a player from the market it causes concern. Farmers always look to get a fair and proper price for their livestock when they bring them to market.
A key aspect going forward will be live exports; if there is a concentration of ownership within the processing sector, live exports will be needed to provide competition.
“The IFA has done a lot of work surrounding live exports in the past. Irish cattle are now being exported to Turkey and Libya; we are also hopeful that exports to Egypt will become a reality,” he said.