‘Retailer margin continues to rise as beef farmers suffer’
At a time when beef and livestock producers are under enormous pressure, it is absolutely disgraceful that the margin been taken by processors and retailers continues to grow as shown by analysis carried out by ICMSA, according to Michael Guinan, Chairperson of ICMSA’s Livestock Committee.
This is the elephant in the room that neither the Minister for Agriculture, Food and Marine nor his counterparts in the EU are willing to address and until this matter is investigated and addressed, farmers are going to remain very vulnerable to the power which is getting more concentrated by the day at processor and retailer level.
Michael said that an analysis carried out by the ICMSA into the average return to the beef farmer from each kg of beef sold showed that farmers were getting 46% and 47% of the consumer price from steers and heifers respectfully in March of this year. ICMSA at the time highlighted this finding describing how it had fallen from a return in the mid-fifties a year earlier. ICMSA’s latest analysis, Michael Guinan said, is for the intervening months of April, May and June and again it shows this trend of squeezing the Irish farmer continuing. These figures are now at 44% and 45%.
The problem farmers face at this time, Michael said, is not that beef prices have fallen for the consumer but that the players up the chain, the processors and in particular the retailers have decided to take advantage of increased supplies simply to boost their own margins at the expense of farmers and they are also using new specifications to boost their profits. The grabbing of margin by those further up the chain will only be solved at EU level and it is essential that our Minister and our MEPs make the power of multiple retailers a key policy priority for the new term. This issue has been discussed for years but no practical actions to aid producers have been introduced.
On the plus side, with beef supplies expected to decline for the rest of 2014 and into 2015, some relief should be on the horizon in the coming months. However, Michael Guinan said, for Irish farmers to fully benefit from the easing in supplies, a number of serious bottlenecks need to be addressed with the export of live cattle to Northern Ireland top of the agenda along with specification issues, efforts to generate a viable live export trade for forward cattle and minimising the impact of the recent Russian ban. These issues must be at the top of the Ministers agenda.
Beef supplies, Michael Guinan said, in Ireland are currently running at 12% above 2013 levels but in the UK, they are 2% below 2013 levels. Cattle supplies are likely to ease in Ireland over the coming months and into 2015 and also ease further in the UK in the coming months which is positive from our perspective given that the UK is the main market outlet for Irish beef. Latest figures, Michael said, indicate that kill numbers in the UK will fall further in 2015. This fall in production in the UK should lead to increased demand for Irish beef which along with the expected reduction in supply should lead to upward pressure on prices. The retailers and processors have used increased supplies against farmers over the last year and hopefully, we are moving into a period when supplies will tighten and farmers will get their fair share from the marketplace, he said.