Is it appropriate that factories should have feedlots?
The question needs to be asked as to whether it is appropriate for beef factories to run cattle feedlots, according to the general secretary of the Irish Cattle and Sheep Farmers’ Association (ICSA) Eddie Punch.
Punch was discussing the matter of continuous price cuts to beef with presenter Claire Mc Cormack on the latest episode of FarmLand.
CEO of Kilkenny Mart Michael Lynch was also on the show, discussing the impact of low prices on ringside confidence.
Towards the end of last week, beef processors opted to knock another 5c/kg off prime cattle base quotes. Where 375c/kg was available for bullocks in the early days of last week, factories have now lowered this to 370c/kg.
In addition, the factories are operating off base quotes of 380c/kg for factory-fit heifers. This additional 5c/kg drop in base quotes leaves farmers with little or no profit margin.
Rising meal costs and fodder shortages are hanging over farmers’ heads and these price cuts are destroying farmers’ confidence in the market.
‘Controlling beef prices’
Asked on the matter of the ICSA engaging with beef factories, Punch explained: “There’s a number of problems here that are feeding into this.
There is a very clear, orchestrated effort to drive down the price and farmers are at their wits end.
“We in ICSA are shocked at the absolute ruthlessness in the year we’ve just had, when farmers have been through the longest winter in years, snow in March, drought in June and July, huge additional costs, under huge stress and pressure, and yet price is being driven down at a time when the demand situation in supermarkets and retail outfits across the UK and Europe is quite good,” he said.
Punch is concerned that the aim of the current trend is to get price down so that when beef gets scarcer later in the year, prices will have a long way to climb to be a reasonable position.
Drawing comparisons on how other sectors have moved to support suppliers during this very challenging period, Punch noted that “at least in the dairy and the grain sectors there is some compensation on price”.
“We see dairy co-ops trying to support their farmers a little bit, but the sheep farmer and the beef farmer are left totally out in a limbo by the meat industry and I’d really ask what kind of people would try to profiteer on farmers in a year like this?” he said.
Highlighting how UK beef prices appear to be steady to improving since the beginning of the year, Punch estimated that the differential between the two markets on a 360kg steer is now up to €180.
“There is no justification for that and it really begs the question, why would we, as farmers, subscribe to the strategy to expand Irish meat exports, the whole FoodWise strategy to expand, expand, expand, run faster to stand still at a time when the meat industry has shown it has complete indifference.
“It is reprehensible what they are doing, reprehensible,” said Punch.
Speaking ahead of next week’s much-anticipated Beef Forum, Punch posed questions over the suitability of factories having their own feedlots.
The way in which the factories have got into the business of feedlots, I think this really needs to be looked at, whether it’s appropriate or right that factories who are involved in processing should also be in the feedlot business.
“Because they’ve been using feedlots to keep a control on beef prices as well at times of the year when supply gets a little bit scarce.
“And at the same time now they’re using the beef price to interfere in ways with the store trade, because they’re sending very strong signals out which is deterring people from buying stores, so that their own feedlots can then buy stores at a little less than they might otherwise do.
“So we have to have a look at what’s going on here,” he stated.
On another point, Punch acknowledged that EU Commissioner for Agriculture and Rural Development Phil Hogan has been doing work to tackle Unfair Trading Practices (UTPs) in the food chain – however, he contended that greater efforts are needed.
Commenting on retailers, Punch noted that supermarkets that “like to boast” about how they use Irish beef need to ask themselves whether they happy to continue “using Irish beef off the back of producers who are going under”.
Is it really sustainable the way you’re ‘supporting’ Irish farmers if you expect them to work for nothing?
Asked whether factories are solely to blame for the current price and low ringside confidence, the CEO of Kilkenny Mart, Lynch said: “Supply and demand is central but – every year we see that the food chain is returning better margins for everyone else along the food chain and squeezing the margins there for farmers all the time.
Lynch stressed that transparency has to be central to change.
“We have to have a look at this and we need to have more transparency around who exactly is getting what,” he stated.