Beef is fast becoming dairy’s poor relation

Last week’s official opening of the new €40 million expansion of Lakeland Dairies’ milk powder operations is further evidence of the business confidence that continues to grow within the Irish dairy sector.

It takes place at a time of strengthening milk prices and the roll-out of fixed-price, long-term contract supply options for farmers.

Where dairy is concerned, most of the money being invested is producer-owned or – if the banks are involved – farmer-owned co-ops will be paying the borrowed finance back.

Obviously, all of this investment within the milk industry must help generate sustainable farm-gate milk prices into the future.

But, overall, the combination of ongoing investment and the availability of long-term supply contracts is evidence that dairy is actively responding to the challenge of world market volatility and the need to deliver some form of surety for farmers into the future.

The same, however, cannot be said for the Irish beef industry.

It remains the largest of our indigenous food sectors and will be the one that is most exposed to whatever final Brexit deal is coming down the track.

Throw in the possible support changes that may be introduced – courtesy of the next Common Agricultural Policy (CAP) review process – and it’s hard not to conclude that the Irish beef industry needs to put some form of blueprint in place, the implementation of which will deliver long-term farmer sustainability.

The reality is that the meat plants will always survive. For the most part, they are privately-owned businesses and they operate on a margin.

They are not obligated to explain how they come up with the farmer prices they pay; the only driver is to generate a profit each year.

The Beef Roundtable, put in place to address the price challenges confronting the beef industry back in 2014, remains operational. It is the obvious vehicle through which real change can be driven through Ireland’s livestock sector. But it needs to start making real decisions on behalf of beef farmers.

The time for action is now; not when the next income crisis hits the industry. Any evaluation of the beef sector must be approached from a farmer-up perspective. It must embrace the structure of the industry in its entirety. But, fundamentally, the work undertaken must find ways of delivering returns that will make red meat a viable business option at producer level.

The European Commissioner for Agriculture and Rural Development, Phil Hogan, has said that he wants to put procedures in place that will ensure farmers receive a bigger proportion of the retail returns generated by food sales. It is important for Ireland to fully engage with this debate.

But it’s not all bad news. The success of the various Angus, Hereford and other quality beef schemes is proof that it is possible to differentiate beef within the market place.

But we need more of this, up to the point where the factories can offer genuine, fixed-price, contract-supply arrangements to farmers.