Details on new beef Producer Organisations confirmed

The necessary legislation to give legal recognition for the first time in Ireland to Producer Organisations (POs) in the beef sector has been signed off by the Minister for Agriculture Simon Coveney.

This legislation was one of the key recommendations to emerge from the Beef Roundtable established by the Minister in 2014.

Commenting on this the Minister said the legislation marks a key milestone in the implementation of the recommendations arising from the Beef Roundtable where we had been tasked with exploring how to put in place a legal framework for the establishment of POs in the beef sector.

“I have now signed into law a Statutory Instrument (SI) effective from today to legislate for the recognition of these POs.

“This framework is heavily influenced by the extensive consultation which we undertook with relevant stakeholders including farm organisations, processors, marts and existing POs in other sectors,” he said.

Key Details

  • Producer Organisations for the beef sector have been provided for at EU-level through new legislation introduced last year.
  • The SI signed by the Minister gives effect to these rules at national level and also sets some minimum requirements for the POs to meet if they are to be given formal recognition here.
  • The minimum number of members required to form a PO at 20.
  • Derogation to allow for POs where the numbers of members are lower than this in a specific production or geographic area.
  • Department is available to work with these groups and assist them to get started though experience has shown that successful groups are those which are driven by the members.

According to Minister Coveney POs, as can be seen from other sectors of the agricultural economy, have the potential to provide farmers with the necessary strength to effectively collaborate and deliver real and tangible benefits to their members.

“This could be through improved prices achieved for their produce as they can now collectively negotiate with processors on price received for the animals they supply. This has the potential to be a real game-changer in rebalancing the supply chain.

“It is also important to note that POs should not be seen merely as a price negotiating tool on outputs but that they can also collectively negotiate on the inputs they purchase as well as allowing them to pool resources to improve on-farm efficiencies.”

In addition to providing the necessary legislative framework, the Minister announced that his Department has also provided guidelines and recommendations which will assist prospective POs in establishing themselves.

Steps to setting up a Producer Group

  1. A prospective Producer Organisation (PO) should gauge interest among local beef farmers and other interested parties, bearing in mind it must have a minimum of 20 members (except where the Minister gives a derogation). The PO should then begin accepting members.
  2. Statutes should be drafted and made available for adoption by members in a democratic vote. Once the prospective PO is satisfied it can fulfil each requirement of the checklist below, it must register as a legal entity with the Companies Registration Office.
  3. The Department will propose to make a technical adjustment to the RDP plan (subject to Commission approval) which will provide funding to engage facilitators to assist POs with drafting Statutes and other start-up activities.
  4. The PO must then apply to the Department for recognition. The BPO/1 form, along with a copy of the adopted Statutes, should be returned to the Department.
  5. The PO should familiarise itself with the Department’s annual reporting requirements as soon as possible. The Department will issue a report form every November. This must be returned by January 31 the following year.

The Minister also confirmed that he has fixed the minimum number of members required to form a PO at 20.

He says this builds on the discussion at the last Beef Roundtable and the views of stakeholders that the minimum number should be at a level which strikes the balance between requiring a critical mass to ensure the advantages of collective action are meaningful while also ensuring that the minimum number is not a barrier to establishment.

The Minister has also provided for a derogation to allow for POs where the numbers of members are lower than this in a specific production or geographic area.

He also said that the opportunity is there now for beef farmers to come together and to develop effective and sustainable POs.

Guidelines for running a beef producer organisation

  • Annual membership fees, rather than a one-off payment, should benefit POs when starting up. This makes the process of joining less onerous on members and minimises disruption of cash-flow.
  • While DAFM does not require a members’ minimum commitment of produce fo recognition, DAFM strongly advises that the PO should request that members contribute a minimum of 75% of the cattle they dispose of annually to the PO. Feedback from existing groups has shown that this is essential for PO cohesion and the success of the group.
  • Marts are already legal entities through their co-operative structure. Therefore, prospective POs should be aware where this infrastructure already exists and may consider capitalising upon it.
  • A PO should consider appointing a person to fulfil administrative, logistical and financial duties. It may be worth hiring a dedicated employee for this role.
  • An AGM is the best way to communicate information to members. An annual report issued at the AGM should help foster a sense of transparency among membership.
  • POs should facilitate and encourage activities not directly related to sale of produce, such as training, group farm visits and discussion groups. These benefits can assist with incentivising loyalty and participation independently of market conditions.
  • Activities other than production can be outsourced, but the PO will remain legally responsible for the activity and its conduct. Secretarial work, lairage or transport, for example, may be good candidates for outsourcing.
  • Transparency and access to data for members will reinforce trust in the PO, so members should be able to access information on past prices, bonuses etc. achieved in order to compare to national prices. These could be distributed via a members-only website section, in an Annual Report or upon request. POs should also ensure up-to-date information is distributed promptly to members regarding optimum weight, spec, age etc.
  • POs may discuss with a factory the feasibility of having dedicated person to oversee kill days. This can provide added value and trust for members and provide a direct link with factories to discuss issues regarding specification.
  • Various approaches exist to the PO/factory relationship. Some groups will have an agreement with one particular factory, some target a range of factories whilst others centre their relationship around a particular brand or product type (breed, for example). Deciding on a clear strategy from the outset will make it easier for prospective members to evaluate the benefits of membership.
  • No ‘one size fits all’ approach exists and the PO should tailor their activities according to the needs of their members and customers. They should also be conscious of the need to evolve, bearing changing market and industry conditions in mind.
  • Recognition is open to all beef farmers and PO members who wish to negotiate collectively with slaughterhouses can avail of the protections afforded by Article 170 of Council Regulation 1308/2013.

“My Department is available to work with these groups and assist them to get started though experience has shown that successful groups are those which are driven by the members.

“I am also committed to seeking a technical adjustment to the RDP in order to provide funding to assist POs to engage specialist facilitators to get groups off the ground which we will update on in due course.

“I would encourage all elements of the beef sector now to work together to avail of the opportunities provided by the establishment of POs which can help build a better more sustainable beef sector in Ireland.”

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