Meat Industry Ireland has defended the price it pays to beef farmers, saying it paid a 40% increase to beef farmers since 2009.
Debating on RTE Radio 1 this morning with IFA President Eddie Downey, Ciaran Fitzgerald of Meat Industry Ireland said the Quality Pricing System (QPS) in Ireland was introduced as an attempt to reward the farmers who produce the best animals. He said the decision behind it was based on research carried out by Teagasc. He said that since the QPS was introduced the price of cattle went up by 40%. However, he said at the same time the price processors paid to farmers increased by 40% farmers incomes fell. The current issue in beef farming he said was due to a number of factors: including inefficiencies in beef production systems; the price being paid having fallen, the number of animals being produced in Ireland, a drop in beef consumption across Europe.
The price being paid to beef farmers, of €3.75/kg, is a reflection of the market in the UK and what it is prepared to pay. “W`e are paying a higher price in Ireland than EU processors, we are somewhere between the UK and EU price.”
However, IFA President Eddie Downey said the price increase was from a very low base. “Farmers have lost real, borrowed money. On top of that, farmers signed up to a deal with the processors on QPS a few years ago and we have seen that particular deal torn up.”
He said farmers have lost confidence in the system and need €4.00/kg just to break even or €4.50 to make a profit. “Grange last week quite clearly said that in the most efficient system you need €4/kg to break even and €4.50/kg to make a profit.” He then went on to give credit to the meat industry which has helped Ireland move from producing beef for cold storage and bottom shelves in supermarkets to now being a prime product. He said Bord Bia and the meat industry have done a good job in promoting Irish beef, but it still sells for the same price as UK beef.
He also said the volumes going through the system were an issue. Once you cross 30,000/head per week the industry cannot cope with it. The Food Harvest 2020 report says we should have 40,000 (animals) killed per week. The industry has the capacity to kill but not to sell or market this volume of animals.”
However, Ciaran said he did not accept this point and said that for the last four or five years beef consumption has fallen in Europe, but luckily for us production in Europe was also falling. “But, since the end of last year, there has been an increase in production right across Europe, so that balance is out of kilter. There is weakness right across the EU market. We live in a market that is defined by what the retailer will pay, and there are issues around cheaper proteins.”
Eddie Downey said the retailers, with special offers, are the main offenders and the industry must deliver a proper price to farmers. He also said that farmers need to see the margins that processors and retailers are making.
However, Ciaran said figures from the Central Statistics Office show that meat processing has the lowest margin in the industry.