'If retailers don't make profits on beef it's because they choose not to'

The Irish Creamery and Milk Suppliers’ Association (ICMSA) has claimed that if retailers are not making a profit on beef, it’s “because they choose not to”.

Des Morrison, chairperson of the ICMSA’s Livestock Committee, threw doubt on claims made by a professor at University College Dublin (UCD) that retailers are not “making a tonne of money or a tonne of profit” from beef.

Morrison was addressing the comments made by Prof. Damien McLoughlin – who teaches an Origin Green ambassadors class for the Bord Bia Programme – on RTÉ Radio 1 yesterday, Tuesday, August 6.

The ICMSA livestock chair said that farmers would be “very skeptical indeed” about Prof. McLoughlin’s argument that retailers were making small margins on beef.

“If the processor-factories aren’t making a profit and the retailers aren’t making a profit, then could the professor please tell us who is making the difference between the roughly €3.50/kg the farmer is getting and the approximately €9/kg the consumer is paying?” asked Morrison.

“I’m sure every farmer in Ireland would be interested in the answer,” he added.

Morrison went on to say: “I’m not doubting Prof. McLoughlin’s expertise or motives, but if you put forward a statement like that then we think it’s incumbent upon you to supply a breakdown that supports your argument.

Even assuming that his analysis is correct…then we’re still left with an explanation that works backwards from the point where retailers use beef as a way of increasing footfall…and then making-up their alleged lack of profit on beef through high margins on other products.

Morrison acknowledged that this may be the case, and may be common. But he stressed, in that case, that the retailers were choosing to use beef as a “loss-leader”.

“In making this choice and selling the beef at artificially low prices, what they are actually doing is using the farmers’ margins to subsidise their sales tactic,” he claimed.

Morrison’s argument is that retailers tell factories what price they will pay. The factories then cut prices to farmers to get their profit margin and make up for the low price offered by the retailer.

According to Morrison, if it was true that retailers had no margin on beef, it was down to a “strategic decision” on their part.

“If that is the case, then the retailers are making a conscious decision to use beef as a loss-leader…what farmers object to is the fact that the cost of the retailers’ decisions is passed back directly to, and borne by, the farmer and primary producer,” concluded Morrison.