Joint Committee on Agriculture, Food and the Marine debate

Future of the Beef Sector: Discussion (Resumed)

Chairman

Before we begin, I remind members, witnesses and those in the Public Gallery to ensure their mobile phones are completely turned off as they interfere with the broadcasting system. We are here to discuss the beef sector in the context of Food Wise 2025. It is the second day of our hearings. Last week, we had quite a long session involving a number of farming organisations. In this session, we will hear from the Irish Cattle and Sheep Farmers Association, ICSA. From the association, I thank Mr. Patrick Kent, president, Mr. Edmund Graham, beef chairman, and Mr. Eddie Punch, general secretary, for their attendance. From Macra na Feirme, I welcome Mr. James Healy, president, Mr. Derrie Dillon, agricultural affairs manager, and Ms Jennifer Keegan, agricultural policy officer. I thank the witnesses for their submissions, which were received earlier and read in great detail by members. I will restrict witnesses' opening statements to five minutes per group in order that the question and answer session will be more beneficial for everybody.

Witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

I invite Mr. Kent to make his opening statement.

Mr. Patrick Kent

I thank the Chairman for the invitation to this meeting of the Oireachtas Joint Committee on Agriculture, Food and the Marine. We welcome the opportunity to engage with the committee on the future of beef in the context of Food Wise 2025.

The beef sector is in crisis. This time it is different. There are many challenges, ranging from Brexit to climate change to vegan ideology being used as a front for multimillion dollar investments in fake meat. Our members are hurting badly. The ICSA estimates that prime beef producers lose almost €4 million more per week on steers, heifers and young bulls than in 2015, the last full year before Brexit. The base price today of €3.70 for an R-grade steer is well below the real cost of production, which the ICSA estimates is at least €5 per kilogram if we allow for a farmer’s own labour cost. Many farmers have had extreme difficulty in having bulls killed. The level of despondency is palpable.

The Food Wise 2025 strategy was devised before Brexit. The prevailing ethos of Food Wise 2025 was the potential to expand significantly our beef exports. It was drafted against the backdrop of the abolition of milk quotas but it did not take a balanced approach to the challenges faced by cattle, sheep or tillage farmers. The main outcome was a plan to expand from €10 billion to €19 billion in agrifood exports but there was no focus on how to expand the income of beef farmers. Today, beef farmers have not seen a single cent of extra income from expanded agrifood exports. Food Wise 2025 considered climate change but did not foresee the extent to which climate change would dominate our agricultural outlook, in respect of marketing beef or Common Agricultural Policy, CAP, reform. I was a member of the committee for Food Wise 2025 but my concerns were not listened to in the rush to expand. What we have is a plan that underpins massive dairy expansion but ignores the needs of the vast majority of 130,000 farmers.

That was before Brexit. Much of the focus has been on what will happen if there is a no-deal crash-out. The extension to October, however, prolongs the uncertainty. For beef producers, Brexit has effectively happened. The ICSA met the European Commissioner for Agriculture and Rural Development, Phil Hogan, in Brussels last week to make the case that the beef sector still needs a rescue package from Brussels, even in the context of continued uncertainty. The Government must strongly push for this. The relaxation of state aid limits is welcome but totally inadequate. The ICSA believes that a package from Brussels should be directly linked to cattle slaughtered by winter finishers. Their losses in price compared with last year vary but are typically in the order of €75 to €100 per head on heifers and can be as much as €200 or more per head on a typical young bull, with account taken of price cuts and weight penalties.

I will ask my colleague, Mr. Edmund Graham, beef chairman, to address the issues of market development, competitiveness and environmental sustainability.

Mr. Edmund Graham

On market development, the ICSA wants to make four main points. We need to seek protected geographical indication status for speciality suckler beef. This must underpin a strategy to develop a high-value suckler brand, built around imagery of biodiversity, high animal welfare and low-carbon emissions per hectare. Live exports must be grown and the dairy sector should pay for increased lairage facilities at Cherbourg. Finally, we need to rethink dairy expansion and its impact on beef supplies.

On competitiveness, the ICSA believes that a major threat still exists from Mercosur and we recently met the chief EU Mercosur negotiator. We were left in little doubt that German cars are the priority. It is not realistic to expect Irish beef farmers to be competitive with cheap beef imports from South America. Ireland should resist the momentum for a Mercosur trade agreement and the Oireachtas should vote against any deal in which Irish beef will be undermined. Trade deals have to be seen in the changing context of Brexit. Teagasc should be mandated to ensure that all cost of production measurements account for own labour and own land costs. We should not hide the lack of profitability behind cross subsidisation from off-farm income but we also need to recognise that return on hours worked on farm is often a far better metric for a part-time farmer than increasing gross output or even net margin per hectare. It is now evident that increased intensification does not lead to an economically viable model, as has been demonstrated by research demonstration farms. The conclusion is that suckler beef needs a much higher price and a priority must be to develop niche markets. The corollary is that trying to operate calf-to-beef systems with unsuitable progeny from the dairy herd is futile.

Chairman

I ask Mr. Graham to begin to finish up.

Mr. Edmund Graham

The margins of all players along the food chain need to be subject to audit and full transparency. The ICSA believes that Ireland should push for an EU level auditor to audit and publish who makes the profit from beef and to expose retailers who take excess margin from the food chain. There needs to be an investigation into how beef processors use feedlots. This should be examined from an anti-competitive position and abuse of a dominant position should be examined against the backdrop of the Google fine imposed by the European Commission in 2019.

The beef price grid needs to be reviewed. The Irish Cattle and Sheep Farmers Association, ICSA, favours a simplified grid with real and worthwhile bonuses for U-grade cattle. We also want to see an end to the abuse of the quality assurance scheme by meat factories and we want an end to artificial devices for squeezing price such as age, weight and residency conditions.

On CAP reform, the priority must be to deliver the bulk of payments to less intensive cattle, sheep and tillage farmers. Those who need a nitrates derogation do not need direct payments.

Chairman

We can go into the statement in more detail in a few minutes.

Mr. James Healy

I am the Macra na Feirme national president and I am joined by Mr. Derrie Dillon, Macra na Feirme agricultural affairs manager, and Ms Jennifer Keegan, our agricultural policy officer. Macra na Feirme welcomes the opportunity to present the views of young trained farmers on the future of the beef sector to the Joint Committee on Agriculture, Food and the Marine. This year, the organisation celebrates 75 years of representing, supporting and developing young farmers to help them overcome the challenges they and their communities face. Our young beef farmers are facing great uncertainty, which emphasises the need for action to develop a pragmatic action plan for the sector. We must work to restore the confidence of those that keep this sector alive.

Through an extensive consultation process, Macra na Feirme engaged with and consulted young beef farmers across the country both through surveys and at six meetings which encouraged them to debate their views on the future of the sector. We asked them to identify the current strengths, weakness, opportunities and threats facing the beef sector. Although confidence among farmers is clearly low at this time, our members identified a number of strengths that must be acknowledged. We have just highlighted two of those in our presentation. The work of Bord Bia through the sustainable beef and lamb assurance scheme and, in particular, the Origin Green promotion campaign is recognised by young farmers as playing a major role in making Irish beef the trusted product it is. The scheme ensures that our beef products are produced to the highest levels of animal welfare and sustainability. This is capitalised on by Bord Bia through the Origin Green campaign, which has played a major part in highlighting these positives to consumers both here and internationally. However this is not to say that young farmers feel that access to new markets is necessarily rewarding them as it should.

Another strength of the Irish beef sector is our grass-based system as a relatively low cost feed source. It is imperative for Irish beef farmers to take advantage of this, as feed typically accounts for 75% of total variable costs on the average suckler beef farm. This is a strength that is not being capitalised on to its full potential and steps must be taken to broaden the access to training and advisory services which can give our beef farmers the knowledge and technical skills required to maximise the resource at our feet.

We cannot ignore the basic fact that the return to beef farmers for the quality product they produce is not sufficient to sustain a viable income for the vast majority of them, regardless of the beef production system they have chosen to operate. I doubt the committee needs me to outline the numbers, but I hope its members understand the harsh realities that this raises in the homes of those farmers. It must also be said that it is very hard to be green, safe or future-facing if one is in the red.

The expansion of the dairy sector in Ireland was identified as a substantial challenge for young beef farmers going forward. Since the removal of milk quotas in 2015, the suckler herd population has experienced a 4% decline. At the end of 2010 the total number of suckler cows in Ireland stood at 911,104. By the end of 2017, that figure had dropped to 870,567. While good work has been done in boosting the levels of export, the expansion of the dairy herd has led to high numbers of cattle being killed weekly, which has been exploited by those further down the supply chain.

The age profile of the average beef farmer was once a growing concern within the industry. It must now be at the forefront of our thoughts. This is demonstrated by the regularity with which Minister for Agriculture, Food and the Marine, Deputy Michael Creed, highlights his concern about the age profile. For the Irish beef sector to continue providing the high quality produce it does, beef processors and retailers must wake up and realise that their future business is inextricably linked to providing an economically sustainable future for young beef farmers. Macra na Feirme proposes the payment of a young farmer bonus, recognising that young farmers are the most likely to adopt change and put in place the advances in technology that will drive the future of this sector.

I will now refer to opportunities. From its grass-fed nature to its distinctive colour and eating experience, Irish beef is ideally placed to be recognised and protected at European level under the European quality schemes and geographical indications. A geographical indication mark for Irish beef has the potential to add significant value to our quality beef product. This added value needs to be returned to the primary producers for their work and production techniques in producing this distinctive product which consumers clearly identify and associate with.

The development of producer organisations must also play an important role in the future of our sector. These organisations give farmers without size or scale the bargaining power of large-scale beef producers when dealing with the industry and encourage more efficiency in the processing end of the sector. A good working ethos and an understanding of the needs of the group are essential to ensuring the unity of its members. Ideally the group would source an independent facilitator to set up and run the group, encourage proper governance and promote its aims and objectives. Every possible assistance and support must be made available for the setting up of these groups.

It is also important that the best available breeding techniques are used to ensure that the value of this output is maximised for the beef sector and the economy. This will also benefit us from an environmental sustainability point of view. Breeding techniques will help the farmer to achieve key performance targets for the farm, such as calving heifers at 24 months of age. The improvement of the overall genetics of the herd can be achieved by breeding high-index replacement heifers, purchasing five-star bulls and the use of artificial insemination, AI. In particular, the use of sexed semen could play an important role in reducing the carbon emissions of the beef sector by allowing farmers to choose the correct straw for their requirements, whether those involve breeding replacements or having cattle for finishing. As per our previous budget submissions, the use of sexed semen must be supported, possibly by removing value added tax, VAT. Significant work must also be done with the AI companies to look at the development of a centre for creating fresh sexed semen here in Ireland so that its reliability can be maximised.

Chairman

I will have to ask Mr. Healy to conclude.

Mr. James Healy

There are several threats, of which I am sure the committee is well aware. Changes in dietary patterns and trade deals under discussion are obvious threats to the beef industry. Our young beef farmers have also expressed their concerns at the unprecedented amount of information that is being spun in such a way as to attack agriculture. We accept that agriculture must put its shoulder to the wheel and contribute to addressing the carbon emissions which are driving climate change. However, organisations that choose to compare apples and oranges to support their argument and use images from farms on a different side of the planet do nothing to aid the spirit of collaboration that is required to address these issues. Beef farmers want to maintain their social licence to farm and we need to do more to inform the consumer on key facts such as our current status as the fifth in Europe in carbon footprint by quantity of beef produced.

Chairman

I thank the witness. We will go into more detail during questions and answers. The first to indicate was Senator Rose Conway-Walsh, followed by Deputies Willie Penrose and Charlie McConalogue.

Deputy Charlie McConalogue

Would it make sense if we took all the questions in one group and then returned to the speakers instead of proceeding member by member?

Chairman

If members are agreeable, I have no problem with that.

Deputy Charlie McConalogue

I am sorry to interrupt. We will see how it goes. If the discussion becomes elongated, we can go back.

Senator Rose Conway-Walsh

As the witnesses are not exactly hostile, it will be okay on this occasion. I want to concentrate my questions on the call for the margins of all players along the food chain to be subject to audit and full transparency. The ICSA believes that Ireland should push for the involvement of an EU level auditor. We spoke last week about transparency and data, specifically who holds data, how they could be used and why that use is being prevented. Can we not carry out an audit as a member state? If the data from the Department of Agriculture, Food and the Marine are made available to the Competition and Consumer Protection Commission, could the latter carry out a proper examination? What do the witnesses think it would find in such an investigation? I will ask the same question that I asked the organisations last week. Do the witnesses have reason to believe that a cartel is in operation among the processors?

We will be meeting the processors in a later session. In the absence of a proper audit of the raw data and in light of the reluctance to put the data on the table, we can only assume that practices are being covered up. I look forward to greater transparency in regard to that data because, once received, we will be able to examine some of the other measures mentioned, which are important. Until such time as there is transparency, we cannot determine where the money is being spent and so on. The beef sector is worth €2.6 billion. That money is ending up in somebody's pocket and that is certainly not the farmers of rural Ireland, in particular of Mayo. I would welcome the witnesses' views on the matter.

As other members will pose questions on other issues, I will concentrate on this issue. I am glad Macra na Feirme is represented here today. In the absence of Government intervention or action, would it advise young people to take up farming? I refer to the Macra na Feirme opening statement in which it was mentioned there has been a huge reduction in the number of suckler cows. As I understand it, 40,537 cows were lost over the last couple of years. Has Macra na Feirme guesstimated how many cows we might have five years down the line?

Deputy Willie Penrose

I thank the groups for their excellent and informative presentations. I note Macra na Feirme carried out of a survey of young beef farmers, which is excellent. Today, we are discussing beef farmers. Macra na Feirme represents people from across the spectrum. A second year student of UCD of the late Professor Sheehy could have made an excellent presentation here today on beef. It is easy to identify the problems. We are trying to identify the solutions. Would Mr. Healy agree that the premise on which Food Wise 2025 was drafted is hollow? Has Macra na Feirme undertaken any analysis in that regard? The abolition of quotas in 2014 was a seminal event. Most of us could see what lay ahead. We had 1.38 million cows and we now have between 1.45 million. In a few years time, we will have 1.65 million, which is an additional 450,000 cows, every one of which will produce a calf. Most calves are not beef bred.

During last week's meeting I mentioned a study I carried out 20 years ago, which showed that only one out of four of the cattle that were being produced could penetrate the high quality marks at European level. I remember arguing that point and being told by the Dutch that they can breed black and white cows anytime. Is it not all about breeding quality for the market and legislative intervention to ensure the processors do not run amok, as usual? The processors do not intervene to help anybody. They are in the market for themselves. Would Macra na Feirme agree that steps should be taken to ensure that feedlots comprised of up to 7,000 animals do not get subsidies? The processors release to the market at various times to control prices. That is my view, but I may be wrong. Should corporations be receiving subsidies? Has Macra na Feirme given any thought to these matters? Anyone can diagnose, it is the solution that is important. These are the issues on which I would welcome a response from Macra na Feirme.

I note the ICSA is 25 years in existence. The ICSA owes me a clap on the back because it would never have got past its first year without my support. I supported it because there was nothing else happening in the beef area. I also assisted it in getting representation. I refer the witnesses to Mr. Pat Lawlor. He will be able to tell them who fought for the ICSA. Few Deputies were on its side at that time. I was proud to stand with the ICSA and I think it has done a good job.

At last week's meeting I mentioned that between 2009 and 2012 a suckler farmer with 87 acres could average a €12,000 plus return, approximately 100% of which comes from subsidies. That €12,000 has reduced to approximately €11,000, of which 107% comes from subsidies. When one adds inflation of 37%, this means that to retain the subsidies they got in 2009 the return needs to be €16,500. The train is going backwards instead of forward. We now have only approximately 850,000 suckler cows, having lost a significant number of them in the last couple of years. I am aware of this because my own county is bedevilled and losing out.

The abolition of the milk quotas was a significant event. It has to be factored into dairy expansion. I note people traditionally involved in the beef sector have moved to the dairy sector. I see a lot of merit in CAP payments being targeted to beef and suckler farmers, which are the low income farmers. As I said at last week's meeting, the objective of CAP is to preserve the maximum number of farm families on the land. Subsidies were not designed for millionaires or would-be millionaires. They were designed for the ordinary people who are earning only €400 per week and trying to rear a family on it. Has the ICSA examined the impact of the fifth quarter cuts and are processors gobbling up everything such that there is no return to the primary producer?

I would welcome the views of the ICSA on grading and the move to digitalisation in terms of machinery. I refer to the mechanisms that can take the subjectivity out of grading. I know that the ICSA is supportive of the qualify pricing system, QPS. Surely, it needs to be overhauled in light of the significant failures in the past couple of years. I would welcome the views of the ICSA in regard to a review of the QPS.

We can negotiate packages with Brussels but in the event of a hard Brexit there will be a depreciation in currency of approximately 20% to 25%, bringing the value of the euro to €1.10 or €1.11. Depreciation of 2% or 5% will increase the value of the euro to €0.90 or €0.91. Regardless of the outcome of Brexit, there will be a depreciation in currency, although I accept a hard Brexit would destroy the sector. How will the ICSA account for currency fluctuations of that level? It is best not to focus too much on the 53% of the British producers, which would make production totally uncompetitive and accelerate imports into the market. I ask the ICSA to propose two or three solutions that can be included in the committee's report. We are all aware of the factors. We need solutions that are credible and will gain traction when we put them forward.

Deputy Charlie McConalogue

I welcome the representatives of the ICSA and Macra na Feirme and I thank them for their presentations and contributions to the committee's hearings on the future of the beef sector.

There are two key ways beef farmers earn their income. One is the CAP, which is important and essential. Obviously we can identify the current challenges in terms of funding and the need for that to be maintained before the next CAP comes into play. In most cases in the beef sector it is 100% of net income. That is how crucial it is. The other side is price, and I am anxious to hear the representatives' thoughts on how we can get a better deal and return for farmers and, indeed, a margin for farmers in respect of their beef enterprises and the work they do daily to produce beef. There are a couple of key issues in that regard on which they could elaborate. First, there is the price differential between the price paid by processors in the Republic and the price paid in the UK. What are their thoughts on why that exists, how it can be addressed and whether it is possible to tackle it?

We will be meeting with the meat processors but when we have met them previously they have always made the case that the reason for the differential is that the UK is not self-sufficient in beef and therefore its beef producers are able to get a premium over non-British beef. Even though our beef is of exceptionally high quality it retails at a lesser price. They also point to the fact that only three of the seven main multiples in the UK stock Irish beef on their shelves. What are the representatives' thoughts on that? We must seek to increase the price our farmers get. The highest value market we have is the British market and that differential is always exceptionally frustrating for farmers because it shows the price that can be paid for beef and the price they are not getting for their beef.

There is also the European average price for beef and how we compare with that. In recent times we have been under the price but at other times we were above it. Outside the European Union one is into less-value markets, by and large. Europe is 102% self-sufficient so it is a saturated market to an extent. How can we get higher prices and where can we get them? How do we go about doing that? Also, what are the representatives' views, further than what was in the presentations, on the impact of feedlots in terms of the prices paid on the domestic market? What should be the approach to them?

Can they give further details of their views on what reforms are needed in the beef grid? What is their view of a new initiative put forward in recent weeks by Glanbia in association with Kepak in respect of dairy bred beef? In addition, what is their view on the beef data genomics programme and its role and value in the beef sector? Do they believe it should be continued?

People often refer to the fifth quarter and farmers needing to get a return for the fifth quarter. What are the representatives' thoughts on that? In my view the farmers are not getting paid for any quarter, but the focus tends to be on them not getting a return for the fifth quarter. That market has developed in recent years. Previously, there was no value on it but now there is. However, farmers say they do not see any additional income coming to them from it. They are not getting a proper return or value for the other four quarters either. It is a significant issue so will the representatives elaborate on their views on that?

I have a particular question for Macra na Feirme on the views of its young farmers with regard to beef. There has been little to no good news in recent years in the beef sector. That is why we are here today, to see what the future can be and how we can provide a viable future for the sector. Does Macra na Feirme see many of its younger members going into sole beef enterprises? Certainly, the majority of young farmers we see are going into dairy and, to a lesser extent, tillage. What are the views of its membership on the future of beef?

Deputy Jackie Cahill

I thank the representatives of the two organisations for their presentations. The focus of the committee is profitability in the beef sector, how we can try to restore profitability in that sector and whether Food Wise 2025 is as relevant in 2019 as it was when it was formulated. I am disappointed that the focus of one of the presentations was on other farmers and trying to take money from another sector and diverting it. That will not solve the issues in the beef sector.

We should examine the beef processors, their attitudes and what they are doing. They have weight limits which clearly indicate that the very big carcases coming from a suckler herd are not what the market wants at present. A significant amount of money has been invested in the past five to ten years in promoting Hereford Prime and Aberdeen Angus beef. The vast majority of them are coming from dairy herds. Like many of my neighbours, I finish cattle. I have no suckler cows. I produce quality beef. I have yet to see a survey that states a steak from a Friesian cow tastes different from a steak from a Charolais cow, or that there is a better taste from a Charolais U3+ or U4+ than there is from a heifer or Angus carcase. Having conflicts between different farmers will only play into the hands of the processors. As other speakers have said, we should concentrate on trying to find solutions and getting money into the sector. At present, everybody involved in beef production is losing money, whether they are in a calf to beef system, store finishers, winter finishers or suckler farmers. As I said recently in the Dáil, the issue is who is losing the least because there is definitely nobody making money.

There are many extra confrontations ahead of us. There is the Mercusor deal in which the Commission seems to be disinclined to defend the position of European beef farmers. There is the complication of Brexit and the lack of access we will have to the UK market, whatever the final outcome will be. Solutions are the way forward, rather than pitting one farmer against another. If beef farmers were to take anything from the dairy sector it should be the price index operated by Ornua. A dairy farmer knows what he should be getting for his milk down to the detail of half a cent per litre. There is a basket of products and that index is publicly available, even though during my time in Ornua some of the processors tried to do away with that transparency. Thankfully, with the farmer representatives on the board we stopped that happening. This is something the beef forum should do. We could have an index in which we could put some type of a fair value for what a carcase is worth to the factories. That includes the fifth quarter mentioned by Deputy McConalogue. The fifth quarter was a huge cost to the industry 20 years ago, but that day is long gone. However, the huge costs to the farmers still remain and there is no gain being attributed to it. There should be much more focus on that.

Teagasc has been promoting cross breeding. When this committee met its representatives last January they were still very defensive about cross breeding and its huge advantages. I am critical of Teagasc on that. Many of its research farms have promoted cross breeding with no reference to the reduction in beef productivity from that breeding. If one takes a 20% cull rate and if one has cross bred one's cows compared with the traditional Friesian breeds, there is a huge loss in the culled cow carcase as well as the loss with the calf.

Sexed semen has been stalled for the past ten years. There has been no movement on it whatsoever. Research has been sorely lacking on the reliability and cost of the sexed semen. As Deputy McConalogue said, factories are starting to promote calf-to-beef schemes from the dairy herd. It clearly shows the focus of factories and they are convinced that, when that produce comes to market, they will be well able to sell it. I sound a warning note on that because the factories said the same about bull beef a number of years ago. Farmers who had bull beef aged 18 to 20 months found they could not find a factory to take them.

The road on which farmers in derogation get lower CAP payments is a bad one to go down. Faraway hills can always seem very green. Dairy farmers traditionally have low CAP payments and a roomful of dairy farmers would have a very different view of the way in which CAP payments are distributed and that historical payments have been extremely unfair to them. There are two ways to look at it but to try to take money out of someone else's pocket is definitely not the way to solve the crisis in the beef industry. We are producing beef for sale at prices under the cost of production and that is unsustainable and needs to be sorted out without deviating money from other sectors. Many of those people have very high borrowings and commitments.

There is a suggestion that farmers should pay for lairage space on the Continent. Calves which left his country in 2018 resulted in payments of more than €300,000 in levies to An Bord Bia and that should be more than enough money to provide lairage facilities on the Continent. An Bord Bia is a promotional body and tries to secure routes to markets for Irish beef. Live exports must be a pivotal one of those routes and there is definitely not enough being done in that regard. We can get large numbers of calves moving.

The reality is that we are not moving live export stock of 12 months of age or older at the moment. One hears of an occasional boat here and there but it is not happening in significant numbers. If we are going to put competition in to trade with factories, the live trade will always help the dead trade and there must be extra focus on that.

We must focus on solutions to the problem of how to restore profitability to the sector. Price transparency in factories is important. We need to get to the root of what the value of the carcase really is to us.

I want to ask a question of Macra na Feirme. A cap of €70,000 on tax relief has been introduced on incentives and concessions on the taxation side, including stamp duty, stock relief and concessions when a farmer had formed a partnership with a family member. That cap of €70,000 can look significant if looked at quickly but is it a stumbling block at the moment for land being transferred to the younger generation? That cap will not be long evaporating when we consider the price of land at the moment and stamp duty of 6%. The introduction of that cap is a retrograde step in trying to attract and give control of land to the younger generation. I would like to get the view of Macra on that. It will slow the transfer of land and land will be left to inheritance rather than transferred. It is a retrograde step. As sure as night follows day, CAP negotiations are ongoing at the moment and a fund will be put aside to give young farmers a top-up. I am not saying I object to that but it will be coming out of other farmers' pockets. On the other side, Governments are putting a cap on incentives to attract young people into the industry and those two policies are opposites; I cannot see how the Commission can say it wants a young farmer top-up, on one side, and then puts a cap on the tax incentives on the other. I would like to get the view of Macra on that.

Deputy Martin Kenny

I missed both of the presentations but I have read through them. The so-called beef crisis seems to me only an extension of where we have been for the past number of years. It may have been presented as a crisis in recent times but it is not new to us. We mainly deal with suckler farming in the part of the world I come from and people have been in this position for quite some time. The prices they are receiving for their animals is so poor that many are taking the option to leave farming. That is a big problem and will be so in the future.

I want to raise a couple of issues about some of the rules that have been put in place, particularly the four movement rule. All farming organisations need to get around that and call it for what it is - simply a means of reducing the price. It is a price control measure by the processors. There are also rules on age limits that refer to under 30 months, under 24 months and so on, which are simply price reduction mechanisms. There may have been some legitimacy to them some time ago when there were problems with bovine spongiform encephalopathy, BSE, and other things but those days are long gone. I know nobody who knows anything about the age of a piece of meat before buying it. I know nobody in any processing facility who worries about the grade of animal the meat is coming from when filling an order. The order is filled by U-grade meat or whatever other grade is available and the price is the same regardless of where the animal came from in the beginning.

We need to recognise there are issues that must be dealt with. Both of the submissions from our guests mentioned that we have an opportunity for remodelling. Sometimes a crisis is a time for action and it brings concentrated minds together to try to resolve a situation. This is a crisis that should not be let go after putting a sticking plaster on it because things will improve a little bit and appear to be getting better, everyone will ease off, and we will end up back in the same place in a couple of years time.

This is an opportunity to take real action and consider taking the beef industry in a different direction. There are opportunities for lower intensity, higher nature farming for a higher price. Mr. Jim Power was before this committee a couple of years ago talking about a study he had done about Brexit and the opportunities and problems it would present. I asked him at that time about the marketing of beef. Irish beef was being marketed on a par with beef from everywhere else in the world. We were working in a world market. He concurred with me, as would anyone else who is logical, that the product we produce in Ireland is unique. These are grass-fed, free-roaming animals, from a family farm and traceable from farm to fork. Those four things alone, without even talking about the nature value and green image of Ireland across the world, offer an opportunity to put Irish beef, lamb and meat products in general into a different place. We need to market them as such. That may require to occur over a period of time and the challenge to the industry and to everyone is to reduce the amount we produce for a while, set ourselves a higher standard, go for the top shelf and the premium product to demand a higher price. That is the solution but it will require all parties to the industry playing together, working together and coming up with a plan. The plan should be more than a sticking plaster. It should be a plan to move the industry to a different place such as that occupied by Irish dairy. That is the kind of direction we need to be going with Irish beef.

A part of the submission from the Irish Cattle and Sheep Farmers Association, ICSA, referred to a sum of €5 per kilo. I agree that is the kind of price we need to see Irish beef getting for the primary producer from the factory. It needs to be getting at least €5 per kilo. We could then get to a place where beef farming is sustainable in the long term. If that does not happen and we just put a sticking plaster on the problem, things will return to where they were before and we will continue to have these problems.

There are issues to do with competition. We will meet industry representatives later to talk about how all of that works and whether competition exists or not. New players coming into the market certainly find big problems in getting rid of their offal and there are problems about how that is structured. That comes into play where the Government, Department and the Minister will need to have a firmer hand on how things are controlled in that part of the industry.

Practices there need a very firm hand as we move forward. That is the challenge to everyone around the table from all the farming organisations and the industry itself. It is in everyone's interests for us to have not just a solvent beef sector but a prosperous one. It is in the interests of the processors, retailers and the consumer. It is in everyone's interest that we have a prosperous beef sector. If we are to decide that this is what we want to do, we all have to work together to make that happen but it will require some heads being cracked together because there are people who do not want that. I feel there is a large sector out there - certainly the supermarket sector and perhaps parts of the processing sector - that want to continue as they are and maintain the status quo. This dip in what has been an ongoing crisis is an opportunity to say that we should take this and deal properly with it.

Deputy Marcella Corcoran Kennedy

I thank the witnesses for coming before the committee this afternoon to help us with this very important piece of work. What are their views on the ambitions in Food Wise 2025 in terms of the potential that was clearly outlined in it and what the reality is? Is what is contained in that plan sustainable? That is a key question.

Could the witnesses tell me more about the young farmer bonus, which has been referred, how they see that being distributed and where it would come from? I wish to focus on two points in the submission from the ICSA on the dairy sector paying for increased lairage capacity in Cherbourg. Could the witnesses expand on that comment? Could they expand on their proposal for an EU-level auditor to audit and publish who makes the profit from beef and expose retailers and processors that take excess margin from the food chain?

Chairman

We will return to the witnesses.

Mr. Patrick Kent

I thank the Chairman and members for their questions. First of all, we must think about what we are producing. We are actually producing a very high-grade product. I spoke to some Dutch people during the week about the restaurant experience of eating Irish beef. It is in a different league and it is not possible to emulate that in continental Europe except in parts of France with grass feeding. We produce grass-fed beef, which includes the highest-priced product in restaurants. Irish beef is generally found right throughout the major cities in Europe. Unfortunately, our product is not being marketed adequately. I think it is actually being dumped. I would question a lot of the funding that is going into some of these so-called Government agencies. Perhaps some of these people could be decommissioned and new people put on board to actually carry out the marketing because I do not believe it is being done properly. Instead of putting in the money, the Government should put those people on a farm assist-type wage for a couple of years and let them think about what they have been doing, which involved sending farmers down the road of increasing production while they have not been providing the markets for it. That needs to be done. Some of these Government organisations need to be sidelined and shelved and that funding used to back up even the likes of Lidl and Aldi, which have done a great job of marketing here. I am not sure about what it is like on the continent. We need to promote grass-fed beef. Being GMO-free is another issue. We are being highjacked by some Government agencies but 100% of farmers do not grow GMO products. Small amounts of them are used in our pig, poultry and dairy industry. That can be changed. In general, it is too expensive to use soya in the beef industry so it is not used. Grass-fed beef has zero GMO and we need to get a high price for it. We need to market it as such and we need to get a price back to the primary producer for that. Of course, we need protected geographical indication, PGI, status for it.

Our organisation has given the red card to the grid system because it is only a vertical integration system to force farmers into vertical integration, weak selling and trying to comply with a range of regulations that are not actually required by the market. I have seen the results of some recent testing. It has involved testing 14-year-old cows off grass, seven-year-olds and young beef. The 14-year-old was the most flavoursome. Some of it involves with complying with 20 months. Some of this is very questionable. Perhaps it might be different with intensive indoor bulls but I would still have questions about all of that.

Regarding the price in the UK versus the price here, it makes no sense at all that we are taking a lower price than the UK. Our market is right next door. We need to focus the minds of these agri-vultures. They have been getting levies off us. We are funding them and are getting nothing in return. The fifth quarter is another issue. I agree completely that it is worth at least €200 per head. We have never been paid for that and it is about time a farmer got a payment for that.

Regarding the grid system, the actual grid machines constitute a quandary. They seem to be inefficient and at least 20% out of line with what is supposed to be there. Dual energy X-ray absorptiometry, DEXA, scanning is similar to airport scanning. Work is being done on it in Australia and it is very promising. The DEXA machine works on edible meat yield to determine the exact amount of edible meat on a particular carcase. We need to work very quickly on that because it is very efficient and provides 100% accuracy or near enough to it as opposed to 60% to 80% with the conventional machines on edible meat yield depending on light, shape and all the rest - very variable things. Light levels in factories can change grid results. In addition, farmers could have a load of 15 cattle going to a meat plant and have 15 different prices. Two farmers could be arguing between themselves about whether they got one or two above a particular level instead of arguing with the factory for getting such a bad price so it is taking the focus off the factories using that system to pay farmers a very poor price.

A war on meat is being funded by large multinational corporations and being funded through quangos and NGOs. The war on meat is a question of education. There was a question in schools recently connected to a chewing gum manufacturer owned by a chocolate manufacturer that is owned by multinational corporations that already heavily invest in fake meat or in skewing the narrative in that regard but the reality is that if children eat quality Irish beef rather than a lot of sugary concoctions such as fake meat-type products, they are actually healthier, smarter and better-looking; are not obese; and do not have diabetes. These fake meat-type products will probably be tasty enough but the health of the person is another factor. If these big multinational corporations also invest in pharmaceuticals, of course, they will push these quangos that get far too much airplay and media coverage. We need to follow the money trail in any of these so-called quangos that are supposed to represent the environment.

Regarding the environment and sequestering carbon, we have an extensively, rather than an intensively, stocked system that involves outdoor grazing whereby each acre can sequester up to five tonnes of carbon. Regarding emissions, the output per animal is only 50 kg so it is a no-brainer to have grassland farming using cattle, sheep and so on. We should be getting paid for carbon sequestration rather than listening to the load of tripe coming from some media outlets and quangos. I could go on all night but I will pass on to Mr. Punch and Mr. Graham.

Mr. Eddie Punch

Let us talk about our proposal for auditing the price of beef and the margins at EU level. Someone asked previously why it should be done at EU level. Deputy Cahill spoke about using the price index operated by Ornua but at one telling point, he said that when during his time in Ornua, some of the processors tried to do away with that transparency, the board was able to prevent that from happening. There are no boards in meat factories so that is the critical difference. Therefore, we must deal with this through a regulatory approach. In our view, doing it at Irish level will not work because we are an exporting country, the beef we sell predominantly goes into markets all over Europe and in many cases, the multinational retailers that sell our beef are not answerable to just one member state.

We see how Commissioner Margrethe Vestager has shown her teeth in tackling the likes of Google. That is the kind of power we need to deal with companies of this kind. There is no possibility of resolving all of the issues that prevent getting a fair price unless there is absolute transparency in naming and shaming and showing where the margins in beef production are going. Farmers spend three years breeding and feeding cattle. About three weeks are spent processing that meat, delivering it and putting it on shelves and about three days are spent selling it. We do all the work and they get all the profit. This has to be tackled. What Commissioner Hogan did in tackling unfair trading practices is only the beginning. We need a much more aggressive movement by politicians right across Europe to ensure that consumers and producers know exactly who is making what margins out of beef.

This is particularly important because the processing industry operates on the basis of unlimited private companies. Their accounts are a mystery, completely opaque to everybody. The large multinationals are public limited companies, plcs, and there is some examination of their profits, but because they are such massive corporations, we do not know whether they are making money out of selling washing-up liquid, chewing gum or meat. We need to drill down and do a granular examination of what they are making out of the critical parts of the food chain. Until we get to that stage everything else is going to be very difficult.

We have said that we want to see suckler beef marketed as a specialty product. That is critical and that is why the Irish Cattle and Sheep Farmers Association, ICSA, has been looking for protected geographical indication, PGI, status for suckler beef. That can be a help to Irish beef. If we try to secure PGI status for the entire national supply of beef, we will undermine our ability to get any niche price premium for any of it. That would play into the hands of the processors. It would put all of the beef into one massive mountain for the meat factories to do what they have always done, which is to play one group of producers off against another. We need to look at specialised prices for specialty producers.

The ICSA holds that we need to better target Common Agricultural Policy, CAP, payments at low-intensity to medium-intensity farming systems. It is all very well for Deputy Cahill to say that we should not pit one against the other, but the fact is that CAP reforms have already taken a lot of money from our members through convergence. Of course we want a fully funded CAP. Even with a fully funded CAP, however, there is not enough money to support cattle and sheep farmers adequately under the present regime. A potential 5% cut, which we hope will not happen, would make things tighter still. Choices must be made. The cattle and sheep sector and the tillage sector produce a half and a quarter, respectively, of the emissions of intensive dairying systems. They are doing the dairy farmer a favour. If we all had the emission levels of high-intensity dairying, Ireland would be in serious difficulty regarding climate change. We are keeping the wolf from the door when it comes to penalties because some farmers are using farming systems that are less intensive and produce less emissions per hectare. It is only logical that those farmers should be rewarded for that because they are helping the national interest. They are also allowing farmers who want to be more intensive to continue to be more intensive.

We must also consider the fact that the dairy expansion model has had an adverse impact on our sector. There is more to it than the number of calves. I refer to the deliberate strategy of going down the New Zealand route of raising Jersey cross and Kiwi cross calves. That has been done primarily with herds of 200 to 300 cows. Let us be honest about it. This is about pretending that one farmer can do the impossible in terms of numbers. Those are the places these calves are utilised. There is no point in putting a tooth in it. We have seen no system of beef finishing that will make it possible to finish those calves. This needs to be rethought. We are disappointed that Teagasc has not shown what could be done with a herd of Montbéliarde, Fleckvieh or British Friesian cattle. Unfortunately, Jersey cross is the predominant model used in the rush to expand dairy herds. There is a bit of a rolling back from that now, but it will take three or four generations to solve that.

The grid was mentioned. We think it needs to be reformed. The weight limits are a significant problem for suckler farmers. Last night I was looking at the Tesco offering on fake meat burgers. Two of those burgers can be bought for €7. This goes back to the point we are making. We have got to get on top of what retailers and processors are doing to our sector. They have told us for years that consumers will not pay any more than €10 for two steaks, which are high-quality natural products with nothing added. However, they are selling two fake burgers for €7, even though the beef burger, the genuine article, costs considerably less. How are they managing to get this money out of consumers? The reality is that we are being led astray as to what consumers will or will not pay for. Interestingly, 27 ingredients go into the Tesco British version of the fake burger. It is packed in the UK using plant products grown in the USA. They may be genetically modified. Who knows what the regulations in the USA are? This stuff is brought in here and sold as a premium product, yet we are told that we cannot get any more than €10 for two steaks. We are told that minced beef has to be sold at half price to get it off the shelves. Somebody is codding somebody here. It all goes back to the need for a tough regulatory approach at retail and processor level. We must have this. In our view, every politician in every member state must stand up for this. Commissioner Margrethe Vestager would not tolerate Google completely controlling the Internet, yet we do not seem bothered by allowing a couple of multinational corporations to control the food chain. That is where we have to start and that is the central point we want to make on this.

Mr. James Healy

We will do our best to cover as many of the questions as possible without repeating what others have said. Regarding the price differential, through the European young farmers association, the Conseil Européen des Jeunes Agriculteurs, CEJA, we have the opportunity to put members on the Meat Market Observatory. It is very difficult to get transparency and information on European prices for beef and compare like with like. This lack of information and transparency seems to be a cultural issue in the meat industry, not just here but across Europe. That creates significant problems. I do not know if that would be fixed if we had all the information or whether that lack of information points towards a cartel. I do not know the legal definition of a cartel, but I would see it as an unfair trading practice. It certainly reduces the options and makes life difficult for farmers, who have no certainty. When a cow calves, a farmer does not know what that animal will be worth in two years.

There is also a significant lack of transparency among retailers. Several Deputies mentioned the rules restricting the price and the options for the farmers. We are told by the processors that this is the result of retailers making demands on behalf of the consumer. Mr. Punch mentioned what they tell us about prices on behalf of the consumer. Questions need to be asked about some of the rules that are in place.

While some started with some very logical reasons, the reasons for the restrictions no longer stand. By the same token, taking age as an example, keeping animals for only 30 months is not a practice we want to encourage among farmers. From an environmental point of view, the longer an animal is on the farm, the greater the emissions. It is a question of more efficient feeding of beef animals and rearing animals that have a higher feed conversion rate. These include the continental animals, the higher-quality beef animals. The problem arises where there is a cull cow, for example. The farmer is punished at that point. There is no need for the restriction anymore.

There is another aspect to the price differential. We are now told we are in a global market and the price the global market will pay. One of the Deputies raised the issue of British beef having a premium in the British market. Every beefburger bought in this country uses Irish beef, but all the beefburgers in McDonald's in the United Kingdom use British and Irish beef. The British might not regard us as the same in light of Brexit, but they definitely regard our quality Irish meat product as equal to their own. We should be receiving the same benefit in their market. We should be receiving the benefit of having a high-quality product in the British market.

Consider some of the issues raised by Deputy Penrose. With regard to feedlots and corporations receiving subsidies, we have seen many farmers setting up companies and using this as a tool-----

Deputy Willie Penrose

They would not be unless they were making profit. It is a bit of a contradiction.

Mr. James Healy

We see that being addressed through our definition of "active farmer". In our CAP document, we have proposed a very strong, demanding definition of "active farmer" that implies productivity, business improvement and a farmer who is planning and developing in the right direction. A feedlot or large corporation would not meet what is required in our definition of "active farmer", but it requires us all to demand what I propose in the next CAP reform.

Deputy McConalogue mentioned Europe being 102% self-sufficient. It boggles the mind that a trading bloc that is 102% self-sufficient would open itself up to third-country suppliers supplying poorer-quality product and oversupplying the market further. When it comes to trade deals, while we accept there has to be compromise on all sides, I do not see the benefit to Europe, as a trading bloc, of saturating the market with a product in which it is already self-sufficient.

On the beef grid, members will have seen in our sustainable beef policy document, which we released today and which we sent members before our arrival, that we make some of the same points made by the ICSA on reform of the grid and the exploration of using DEXA scanners, the X-ray machines. At a recent meeting of our young farmer committee, a farmer from New Zealand informed us about how farmers in New Zealand are paid for beef and the element of the payment concerned with eating quality and all the aspects involved in that regard. Given the product we have and given that we have mentioned PGIs, as will representatives of every farming organisation that will sit in front of the committee, this is a matter that should possibly be explored to ensure a greater return to the farmer.

On the beef data and genomics programme, we have sat before a number of committees at this stage and said that, while our members are not 100% happy with it, it is certainly pushing the sector in the right direction. Our members regard it as pushing the right message and driving advancements, developments and the necessary technical skills to improve the sector overall. Some of what was introduced through the BEEP or the associated payment is also pushing in the right direction. Dairy farmers have such control and knowledge of their key performance indicators and production figures. Every other sector needs to match them. There are some that do. Every sector across the board needs to get to a level whereby those involved know their business and costs inside out and are maximising everything they can.

The fifth quarter and the control of outlets for offal and such products need to be examined by the Competition and Consumer Protection Commission. The options for farmers when killing their animals are certainly greatly restricted by comparison with those of ten, 15 or 20 years ago. This has come about through greater control of the outlets through one or two routes.

On some of the more specific questions on young farmers, as somebody with an off-farm job, like a very large majority of the farmers, I regard forward-selling of beef and contracts as a way of increasing income certainty for young farmers. As we mentioned in our presentation, it could come through the producer organisations or young farmers agreeing to reach certain specifications and weights that the processors have no problem telling us they require. If a farmer can guarantee that he will supply a certain amount of product of a certain specification, he deserves to be awarded for the ability to produce that at a given time. The future of the businesses is inextricably linked to having young farmers to produce the product. The age demographic is there for everyone to see. Ten years could see a great change in the number of beef farmers in this country if we are not careful.

On the question of whether we would tell young farmers to enter beef farming, the young farmers are speaking with their feet already. I recently interviewed for the Teagasc-FBD Insurance Student of the Year competition. There are a large number of participants who had beef animals at home who were considering moving to other sectors. If their land did not allow for dairy, they were considering sheep. They see no major reason for optimism or reason for entering beef farming as a way of having a sustainable income. They do not necessarily expect to be full-time beef farmers, but even justifying being a part-time beef farmer is very difficult for them.

With regard to Deputy Cahill's question, on a cap of €70,000 on stamp duty, stock relief and the succession farm partnership, we have made representations to this committee and the Department of Agriculture, Food and the Marine and we have made representations at European level. There is certainly a contradiction in terms because, on the one hand, the Commission is putting forward incentives to encourage young farmers into the sector while, on the other, although a cap of €70,000 might be regarded as enormous in some countries, the relief is eaten up very quickly in this country because the rate of stamp duty is 6%. What is certainly holding up the transfer of land is the uncertainty. Until the advice is given, I cannot say for certain how much of a hold-up there will be.

If it appears that the relief will be on the 6%, that will cause a major hold-up in the transfer of farms to younger hands. I would encourage the committee to keep up the pressure on that as much as possible.

I did not get to mention one issue in my presentation. The last convening of the beef forum did not happen but we expressed our belief that while it might not have been as constructive as we had hoped, there was no benefit gained from not being around the table. Every farm organisation coming before the committee will have a slightly different view of how that should happen, but more unity across the farm organisations is required. When we sit down at the table, there is a unified voice on one side and unless we, as farm representatives, can unify our voices, I do not know how much can be achieved at the table. That might be something for us to consider.

Chairman

Mr. Healy may have forgotten to respond to the issue Deputy Corcoran Kennedy raised about a young farmer bonus.

Mr. James Healy

As I mentioned, young farmers are those who are most likely to avail of technological advancements and in terms of knowledge transfer. A bonus would be tied into adopting those practices and ensuring that beef is as carbon efficient as possible and meets animal welfare standards. We certainly see that among young beef farmers. There is a cohort of young beef farmers who would not consider dairy farming, regardless of whether they had a big enough plot of land. They love beef farming. That is what they want to do. They are the leaders in that sector and they will do everything they possibly can to continue beef farming in a sustainable way. It is those sort of people we want to encourage to adopt the right techniques through working with advisory and education organisations. If young farmers are hitting the right specifications and producing the right product, they should be rewarded for that.

Chairman

A number of members have indicated. I call Deputy Scanlon who will be followed by Deputy Fitzmaurice.

Deputy Eamon Scanlon

I thank the Chairman for the opportunity to contribute. I am not a member of the committee but I have an interest in what is being discussed. There is no doubt that there is a serious problem in the beef industry. I am very much aware of the struggle beef farmers face trying to survive. If they do not get support very soon, they will not be around in 2025 or even 2022. I am here to listen and I am glad to offer whatever support I can give to the committee.

Deputy Michael Fitzmaurice

I thank Mr. Healy for his presentation. My first question for the ICSA is on live exports. We had people before this committee who said there was a major opportunity for them in that regard, but is it sustainable to try to kill up to 40,000 cattle a week? Once farmers were at 27,000 to 30,000 a week, we were okay, but once we went over that number, there was a problem. Even allowing for the reduction in the size of carcase, do the witnesses believe that can continue?

I refer to Mercosur. I have seen a few groups come in here on that issue. In fairness to the committee, and I am not a member, or to the Minister, a person will be appointed by Europe to do the deal with the Mercosur countries, and whether we jump up, dance or whatever, they will want to know how many Mercedes or this, that and the other we will sell. If Mercosur comes in, more than Ireland will be in trouble in terms of beef. I would like to hear Mr. Healy's views on that.

What are the ISCA's views on the four movement rule and the 70 days requirement? If livestock come from an Irish Cattle Breeders Federation, ICBF, or a Bord Bia approved farm and go to another one on the 70th day, it should not be a problem. The witness spoke about anaerobic digestion.

I thank the Macra na Feirme witnesses for their presentation. I see they are promoting five-star bulls. The people on the suckler side of the world would have always contended that since we went down that road, the quality of our cattle, in terms of going for the Italian and other trades abroad, and EU grade cattle has deteriorated. Anyone who goes to a mart will tell them that. Why is Macra promoting that or is it just going along with the likes of the ICBF?

Will the witnesses tell me their view of the advantages of the beef forum, because it has no legal standing? What is their view on the feedlots? Do they believe that exporting slurry and derogations on dairy or beef farms, which may be helping feedlots, is a good idea and should it be continued?

Chairman

I thank the Deputy. Before I go back to the witnesses, I want to ask a couple of questions. There is no doubt that the beef industry has been going through a very difficult stage for the past while. It did not happen today or yesterday, even though it has probably become more prominent in recent times. We need a long-term solution. It could be a populist move to come up with a short-term solution, but we could be back here in a year or 18 months talking about the same issue. Unless there is a definite roadmap for the future for the beef industry, we will be in serious trouble.

We need to concentrate on three specific areas. First, what can be done on the home farm to make it more efficient? Second, what can be done in respect of the processors to make the process more transparent? Third, what can be done by the retailers to make it more transparent in terms of getting as much as possible back to the private producer? That is where the body of work needs to be done. Everybody has diagnosed the problem and we could spend hours rehashing that, but from what I can see and listening to the submissions today and those made on the previous day, there is no silver bullet in terms of addressing this issue.

The only way to address it, and I would like to have comments on this, is to have everybody working together in a constructive manner. The beef forum may not have been the perfect solution, as suggested earlier, but I agree with Mr. Healy that we are better off sitting around a table to try to find a solution to the issues. For example, if the quality assurance system is not working, we have to try to find a solution to make it better. If not, we have to look at finding a more efficient and transparent way of getting the most for the primary producer, which is what it is all about. That is a key point.

In terms of the CAP, we are facing a challenge to try to maintain the budget. I would like to hear the witnesses' views on that. There is no doubt that we all want a fully funded CAP budget, but we also know that it will be a challenge. What are the witnesses' views on where the emphasis should be in the new CAP? Should it be on trying to target the moneys to make sure we get a fair and adequate price for our products?

I have noted recently that the live exports for this year have increased a good deal year on year compared with last year's numbers. In recent years it was predicted that we would be in this situation with the increase in the cow numbers once the milk quotas were abolished. Anybody with a bit of knowledge of the issue would have been aware that a challenge was coming down the line that had to be addressed. We probably did not prepare enough for that challenge. Live exports have increased a good deal. We need to be able to make sure that is sustainable into the future. What do the witnesses believe we can do to make sure that is sustainable for the future?

There has been much talk about the 30-month age limit. In a recent parliamentary question, I asked about the 30-month age limit and the reply was: "The following third country markets have veterinary health certificates with a 30-month age limit for Irish beef." We are looking for export markets time and again, which is crucial, and these countries want a 30-month age limit. They are China, Japan, Iran, Algeria, Saudi Arabia, Turkey, Qatar and Switzerland. Egypt and Singapore also have a 30-month age limit for bone-in beef only. I also asked about the penalty and the reply was: "Non-compliance with these conditions could result in the plant concerned being removed from any lists to export to that market or the closure of the market."

That is a serious situation. If those markets are closed, what will be the alternatives? Much needs to be teased out before we throw out specific issues. More markets are needed and it is all about competition. If we do not have competition, we will not be able to achieve anything. We export so much and have depended on the Great Britain market until now but there is currently a challenge in that regard. To replace the 40% that is being lost in the beef sector, alternative markets must be found. They must be developed in a transparent way to ensure that everybody is able to do it together.

Given the challenges, it is now more important than ever that farmers are not pitted against one another. That is a dangerous road to go down because we have seen over the years that a farmer can be his or her own worst enemy, and it is important that does not happen in future.

On efficiency, I have information from a dairy farmer who has 150 Holstein cows. He uses a beef bull to finish. To feed his approximately 30 Holstein bulls compared with the 30 beef crossbreeds, he needs twice the feed but they put on the same weight and the kill-out rate of the Holsteins is lower. Those animals are approximately 30% as efficient as the half-bred beef animal. While the animals for export might be efficient for the first weeks for veal production, for beef production they are a waste product and are not viable to feed. Some disastrous financial results have been experienced by people losing €500 a head after feeding them. I make no apologies, therefore, for Mr. Graham's statement. We are certainly not pitting farmer against farmer. We are speaking about the dairy industry, which is profiteering with more than 20 people who never milk a cow earning more than €1 million every year and managing the large co-operatives and so on. It is a greed-driven business and it works farmers too hard. Dairy farmers work far too hard for what they get, and they produce too much for too little. They have been exploited more than any other sector.

Beef farmers will not last because they are on such a low threshold of income that they will go out of business unless the CAP is reformed in their favour. It particularly extends to farmers in Ireland, small to medium operations and family units. They will not survive in rural Ireland. Shops and other ancillary industries in small towns in rural Ireland will be wiped out because the farmers will have no spending power. In reform of the CAP, therefore, it is imperative we focus the budget on keeping these people in production because they produce a very high-quality product. Feed conversion efficiency is significant. The pig industry monitors the tons of feed in and the tons of pigs out. It is purely about efficiency and is what makes the process carbon efficient. It is the same in the case of pure dairy-cross animals, such as Kiwis and so on. They are a disaster to feed and I cannot emphasise that enough. I have heard horrendous stories of farmers losing money hand over fist. Young people, in particular, need to cognisant of that because they do not have as much experience. When older farmers see sharp animals, they know the animals will eat a lot of feed to put on very little edible beef, and they will not be caught so easily. Young people, however, are vulnerable because they can obtain money more easily from banks and can find themselves in a situation of unsustainable, insurmountable debt, working for large corporations. I would put question marks over the Kepak tie-in with Glanbia because it could get people into a debt they cannot overcome.

People are in a threshold of trying to work really hard. It is the newest form of slavery - debt slavery. It applies to the dairy industry more than any other industry but it also applies to young people getting into the fattening of dairy bulls. They need to do all their sums and get all of the information possible before they even think of going down that route. They need to talk to some older farmers who have a bit of knowledge in this. They will definitely not get that information from the advisory services, which are focused on working the farmers harder and harder for less and less. That is what farmers have been doing for the past 20 years. They have been working away, and not just on their own labour. They have also been working away their own resources. Their resources are depleting and they are getting bigger into debt with co-operatives and banks. They produce more for large corporations that are investing in hospitals, healthcare facilities and bank buildings in Dublin, other than in the beef farmer's pocket. The beef farmer is the last person to be paid and he or she is paid the least.

I make no apology for standing up for beef farmers in this situation. I add sheep farmers to this. Sheep farming is a vulnerable sector. Farmers should be getting €6 per kilo for their lamb but they are not. Sheep farmers produce probably one of the best meats one can get. I referred earlier to marketing and all of the different Government bodies, staff of which are on large salaries. I believe this to be questionable. Some of the funding goes on pensions, which I believe is 60%. The situation has come to the stage where we are going to have to think about winding up some of these large-----

Chairman

Which bodies is Mr. Kent talking about?

Mr. Patrick Kent

I can put out a list of them. One could start with a lot of them, quite a few of which have superfluous activity going on. They are promoting genetically modified organisms, GMOs, for example, and things that Irish farmers do not want. Irish farmers want to get a better price in their pockets and these people are preventing them from doing that. They are experimenting with things we do not want and that the consumer does not want, and we need to revise what we are doing there.

Chairman

Senator Lombard had to attend a vote earlier. I will give him an opportunity to come in now before we wrap up this session.

Macra na Feirme made an interesting point about sexed semen. There are significant sexed semen trials, some of which I believe are happening again this week, that are examining changing the insemination time to a later part of the day. Will the proposals for sexed semen be part of the long-term solution? Vast numbers of Friesian bull calves are coming into the system, for which we do not have a market, be that market export-led or for calves or stores. We do not want them going to the factory. Is that the issue we need to work on? Not alone does the sexed semen have the advantage of an ability to put Friesian heifers into the dairy stock, farmers could also produce a quality Belgian Blue animal. This would be a suitable option for the beef trade and exports.

Do we need to focus more on technology to try to solve some of this and offer a solution? The trials this week involve several hundred cows being scanned in farms, particularly in the southern half of Ireland. These are important trials to see if we can get the semen issue sorted once and for all.

This is probably the two-handed approach. Too many of the poorer quality animals are going through to factories and too many are being killed. Until we have the competition from the stores or Friesian bulls moving in vast numbers and the knock-on effect of having sexed semen coming on board, that would be part of the solution.

Chairman

I thank the Senator. I call on Deputy Danny Healy-Rae and I ask him to be brief as I want to wrap up the session quickly.

Deputy Danny Healy-Rae

I welcome the representatives from the ICSA, and Macra na Feirme. I thank them for coming in to recognise and highlight the issues that need to be addressed by Government and the EU. Pressures are being felt by farmers as a result of Brexit with all the talk of whether the UK is coming or going. There is so much indecision and so much that is unknown, that it is hurting and reflecting in the prices farmers are currently getting. There are so many issues that need to be addressed by the Government and by the Minister for Agriculture, Food and the Marine. I spoke earlier about lairage for young dairy-bred calves. In 2013, the former Minister, Deputy Simon Coveney, told dairy farmers that they would have to expand, that they could expand and that there would be markets for their milk, but he never realised that those extra dairy cows would produce calves that would be in competition with the suckler farmers.

We cannot do that. They will be at the next meeting and we will be able to direct those questions to them. I ask Mr. Graham to be brief.

Mr. Edmund Graham

A couple of members mentioned live shipment. Live shipment is of the utmost importance. Once the weekly kill goes above 30,000 or 32,000 there are too many cattle in the system so we have to get them out of the country, and the only way is through live shipment. There are big markets abroad but getting the live cattle to those markets is not an easy job. Export certificates are not ideal. The Department should revise them more often and simplify them a little because exporters are having difficulties with them.

We need more exports. The factories do not appear to want a big supply of bulls, but all the exporters seem to want bull beef. They seem to have switched away from steer beef which traditionally would have gone to Egypt or Libya years ago. It is all bull beef now so it is a pity it could not be opened again to use steer beef and older animals rather than younger animals. Many of the animals being exported are quite young and it is a pity we could not get them to two years of age or more.

How are we going to solve the problem of the price of beef? Ultimately, we must get a higher price for our beef. The retailers need to charge the consumer more. It is the only way. I probably have not got the figures right but the average EU consumption of beef per person is approximately 27 kg. If the price of beef rose €1 per kg tomorrow, how much would that cost the average consumer a year? It is €27. There is no reason that the price of beef cannot go up. It will not break people. I will finish with that.

Mr. James Healy

With regard to the ICBF and the five star bulls, our members have a strong belief in scientific evidence.

We asked our members and, while no system is perfect and there are tweaks that need to be made to it, they have a belief in the Irish Cattle Breeding Federation, ICBF, and the work it is doing. We have seen the impact that the economic breeding index, EBI, has had in the dairy sector and if matching results can be achieved in the beef sector, it has to take us in the right direction. There is a discussion to be had about whether there is a need to tweak which traits are weighted, and how, but the scientific evidence is leading down that path and that is the only way to go. There is a terminal index as well as a maternal index and farmers need to make choices around that.

On the beef forum, as I said, it is better to be around the table than not around the table. We made suggestions at the time that there needs to be concrete actions from each meeting and the forum needs to meet more regularly. The forum cannot only meet when there is a crisis. If the forum is to have a real impact it needs to be like this committee and meet regularly and quickly to come up with and action solutions. The findings of this committee should be the prompt for another beef forum meeting where the actions that this committee recommends are discussed and, if agreement can be reached, actioned.

Feedlots started in different ways and have different reasons for their existence but, as I said earlier to Deputy Penrose, they are, in some cases, a market distortion tool for reasons that have been discussed at length. Putting in a definition of "active farmer" similar to the one we have proposed would go some way at least to addressing this and ensuring payments are targeted at the right sorts of people and those who are exploiting the system are not rewarded.

From the point of view of a young farmer, many young farmers start off with a small block of land and we have discussed the difficulties of accessing land at length across various committees. If exporting slurry is a way for a young farmer to make his or her block of land viable, we cannot take that tool away from them.

The Chairman mentioned a couple of places and asked what can be done. Macra's policy on the home farm has identified a number of key performance indicators that beef farmers should be aiming to hit. A farmer who is achieving those will be among the top beef farmers but will also be heading in the right direction for making more money. Those indicators include having a cow calf at 24 months and a calving interval of 365 days, as Mr. Punch mentioned. We also mentioned utilising grass much better. There are targets there which might not necessarily be as applicable as some of the ones that have been mentioned but, on the ground a farmer has, he or she must be utilising grass as much as possible.

Processors need more certainty of income and that can be achieved through forward selling or contracts with farmers. The retailers from Meat Industry Ireland will be before the committee and there is no reason for those retailers not to be brought in. The 30-month rule has been mentioned and there are other rules that have been discussed today and we need to be provided with the reasons those rules are in place.

We have put together a very strong CAP proposal. It has been well received and rather than pitting any sector against another, we have concentrated on what will benefit young farmers. That is where we believe the money is required and we need to be persuading young people across all sectors to enter farming.

The market will dictate whether Friesian bullocks or high-quality animals will leave the country and whatever will make the most profit for the beef farmer is what will be most suitable to leave. There is a discussion among our membership about calves from the dairy sector and there is more of a partnership and collaborative effort between dairy and beef farmers. There are farm-to-farm sales between dairy and beef farmers who are working together to get progeny from which they can make a profit.

We have mentioned sexed semen in a number of pre-budget submissions at this point and we see it as a key part of the future of the beef and dairy sectors. There are questions about the qualities of the bulls available through artificial insemination, AI, and sexed AI in particular but some of our members are taking part in those trials and they are seeing the benefits. There are some differences in reliability between fresh and frozen semen. We need to look at the AI companies that are taking the step of setting up a centre in this country for developing fresh sexed semen.

I thank the ICSA representatives for being here today. We will suspend for five minutes while we bring in the next group of witnesses.

Sitting suspended at 5.59 p.m. and resumed at 6.08 p.m.

Chairman

I ask witnesses and those in the Public Gallery to ensure that their mobile phones are completely turned off. We are here today to discuss the future of the beef sector in the context of Food Wise 2025. I welcome from the Beef Plan Movement, Mr. Eamon Corley, national chairman, Mr. Hugh Doyle, national vice chairman, and Mr. Eoin Donnelly, western regional chairman; and from Meat Industry Ireland, Mr Philip Carroll, chairman, Mr. Cormac Healy, senior director and Mr. Joe Ryan, director. I thank our guests for coming before the committee today and for sending their submissions in advance for discussion.

Before we begin I want to bring to the attention of witnesses that they are protected by absolute privilege in respect of the evidence they give to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise nor make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded that under long-standing parliamentary practice, members should not comment on, criticise or make charges against either a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

I invite Mr. Corley to make his opening statement.

Mr. Eamon Corley

The Beef Plan Movement has been in existence for only six months. The reason we are here is that, even though the beef industry is the most profitable in the country and even though there are many stakeholders in the industry, including the retailers, food service sector, manufacturers, factories, Bord Bia and the ICBF, the reality is that beef farmers are slaves on their own farms. The treatment they are getting is nothing short of abuse. People will look back at this era and say that the beef farmers of this country were abused. That is why they have come together to form the Beef Plan Movement. They have taken matters into their own hands and are saying enough is enough and that they have to fight what is happening and fight for their survival.

Many witnesses have appeared before this committee and borrowed our ideas. We have put a plan together for beef farmers. Many of the ideas were mentioned at the previous hearing and again today but the true authors of the ideas are the people we represent, namely, the farmers we have met throughout the country. What has happened is that farmers have lost all power. Rural Ireland depends on beef farmers. Such farmers are rural Ireland. If we can do nothing else, we can take it step by step and give the power back to beef farmers and ensure that rural Ireland survives.

We have got a decision to make. First, we have to realise there is a problem, second, we have to identify it and, third, we must have the conviction and courage to deal with it. The first issue is that the current pricing system does not work for beef farmers. We are not going to accept that any longer. Retailers, the food service industry and manufacturers set the price for the meat factories. The latter then take their margin and pass back the scraps beef farmers. For the past few years, those scraps have meant we have been getting loss-making prices that do not meet our cost of production. That must not continue. It is in nobody's interest that it do so.

The people who represent the meat industry tell us that there is a free market and that they cannot do anything about it. However, it is not a free market; it is a manipulated market. It is manipulated for many reasons. In this country, there is a cartel. There is a dominant player that dictates the price to everybody else. The meat industry will tell us that there is a free market. The Irish Farmers' Journal lists the quoted prices for farmers. Right down the list, the figure is €3.70. The industry will urge one to look at the next part, namely, the Department-listed prices, and will state that there is a difference. There is a difference because there are contracted factory feedlots getting more and contracted Hereford and Angus schemes getting more. The ordinary farmer who goes in on his own gets the €3.70 the whole way down the line. That is a cartel; it is price-fixing. Let us face up to that fact.

Let us talk about a solution to the problem. Let us talk about the retailer, the processor and the factory getting together and sharing out the retail price in a proportionate manner such that the suckler farmer can get a margin on top of the cost of production. That has to happen or the industry will be gone. We need legislation to ensure that it happens. The meat factories, retailers and people in power, including the corporates, have put us farmers where we are, that is, on the brink of extinction. Our share should be factored into the retail price.

What else has driven us to this position? There are anti-competitive practices. In our view, there are at least seven anti-competitive practices that have left us in the circumstances in which we find ourselves. We must address them as part of the solution. These practices are: the four-movements rule; the 70-day retention period in order to collect QPS bonus; the movement rule for category 1 waste; the feedlots; processor access to our data; the age limits; and the nomad rule.

Exports are a solution to this problem. At present, there is not enough lairage space in Cherbourg for our calves. We have to solve that. There is a problem with visas in this country. The visas of exporters coming in to buy cattle are held up for moths. Let us segregate and give them priority so this does not happen again. We need an export subsidy for weanlings in this country. Let us make it €100 per head. Let us get weanlings out of this country and create some competition. We need a review of the grid. We need branding. We need a proper brand for suckler-bred, grass-fed beef and for grass-fed, dairy-bred beef. The one thing the marketeers have told us is that we need consistency in the beef coming out of our factories. We have not got that. Carbon emissions are a significant aspect. The suckler animal is a very carbon-efficient animal. We need clarity on labelling. We need consumer education and the consumer specifications to match what the consumer needs.

A blockchain can help us. Basically, a barcode attaches to the food produce and the origin of the meat can be traced fully. We need farmers co-ops and we need the stakeholders to build into them in order that we can sell directly from the farmer to the consumer. We need the PGI status that Commissioner Hogan has praised. Some of the factories are not in favour of this. It is important because the suckler-brand beef cannot be diluted and we can get the premium we deserve.

We also need producer groups but we need the existing legislation to be changed a little in order that they can work for farmers. We need new markets for our cattle. There are 12 pending CNC licences to mainland China. We need them approved. China is a huge market. It does not want factory feedlot cattle. It wants grass-fed beef from family farms with high air and water quality. That is what we have in Ireland.

We need transparency regarding the price the processor gets for beef. Currently, there is none. We need transparency on the factory floor. There need to be a farmer representative in place who will work the same hours that the staff of a particular factory work. He would be on the floor 100% of the time and would be able to see the grading of the cattle and trimming. He would also be able to see the weights and TB samples such that everything would be above board. We also need transparency on the levels, insurance, etc. We need stakeholder accountability. There are many boards representing farmers but very few beef representatives on those boards. We need that corrected.

Consider the farmer view, to which Mr. Hugh Doyle will refer. We have surveyed over 2,000 farmers. Mr. Doyle has figures that will shock members. There are threats in the industry. There is a lack of profitability. Issues that arise are dairy expansion, Brexit, the growth of veganism and reduced caps. I have mentioned problems and solutions. We should scrap the four-movements rule, the 70-day residency rule for QPS payment, and the 125 km rule on the movement of category 1 waste. If we were to build some extra lairage and provide an export subsidy for weanlings, we would be taking achievable steps that would improve our situation.

The first thing we have to do is acknowledge that there is a problem. Then we have to identify and solve it. My question for members is whether they have the strength and courage to solve this problem. If they do not, perhaps they should consider moving aside and letting in individuals who do.

Chairman

I will answer that question for Mr. Corley straight away. We would not be having these hearings if we did not have that strength and courage. That answer is very straightforward. We took the initiative to hold these meetings in order to try to find a solution. We all know what the problem is. Everybody knows what the problem is. It is not a problem that arose today or yesterday; it has been there for a number of years, as I said earlier on. While everyone knows what the problem is, the solutions might not be as simple and straightforward to find but we will do our best to find them.

Mr. Eamon Corley

I appreciate that.

Mr. Philip Carroll

I thank the Chairman for his invitation to Meat Industry Ireland, MII, to attend and to contribute to the current work of the Joint Committee on Agriculture, Food and the Marine in respect of the future of the beef sector in Ireland. I am accompanied this afternoon by Mr. Cormac Healy, senior director, and Mr. Joe Ryan, executive director of MII.

The joint committee’s initiative to review and take stock of Food Wise 2025 growth targets, particularly as they relate to the beef sector, is welcome and appropriate. As signalled to the joint committee, the outcomes of Brexit, CAP reform and climate change policy will be highly relevant to how the sector develops in the coming years. We believe that the review should focus on the measures required to maintain development of the beef sector and policy changes necessary rather than considering any contraction of the sector and its contribution to rural economies.

As members will know, the beef sector, from farm through to processing and export, remains one of the most important industries in the national economy. It supports in excess of 70,000 beef farmers and generates an ex-farm output value of €2.4 billion. Exports in 2018, which account for 90% of the sector’s sales, were valued in excess of €2.4 billion. Approximately 10,000 jobs exist across processing, distribution and transport as a direct result of this sector. The sector has a huge and unique impact on regional economy spend and rural economic activity. The average meat plant in rural towns such as Bunclody, Clones or Rathdowney spends over €100 million in the local economy. There are 35 beef processing facilities situated the length and breadth of the country in areas that are critically dependent on these facilities for employment, income, economic activity and wider societal contributions.

The existence of a national strategy for growth and development of the Irish agrifood sector is important. Food Wise 2025 has set out the growth ambitions for agrifood, identifying the measures needed for delivering this growth and helping to keep our sector at the centre of overall economic development. Our targets for beef include growing the sector by some 20% and generating, in turn, increased export earnings of €500 million through the production of 80,000 additional tonnes of beef destined for international markets. For the rural economy in which the sector resides, this additional growth will generate 3,000 extra jobs. To a considerable extent, this additional output growth is a derivative of growth in the dairy herd following the elimination of quotas in 2015, growth which has remained on a continuous upward trajectory. Of course, a key component of the sector is its reliance on the suckler cow herd. MII and its members are fully committed to maintaining and enhancing the suckler cow herd by driving productivity improvements through genomics, utilising the very successful beef data and genomics scheme to assist with calving rates, age at first calving, and by lowering slaughter age and associated weights, these being crucial to increasing productivity and farm level margins, while correspondingly reducing the carbon intensity associated with the sector.

Despite the current challenging market environment, which is largely associated with Brexit-related market turbulence together with the hangover of surplus production at EU level in 2018, real growth has taken place against the Food Wise 2025 baseline period from 2012 to 2014. In 2018, Irish farms sold approximately 300,000 more finished cattle than in the three-year baseline period. At a minimum, this represents revenue growth of over €300 million in farm sales. During this period, taking account of some price volatility, Irish finished cattle price has maintained a strong position relative to the prevailing EU beef price. Indeed, in 2018, the all-categories price, which includes steers, heifers, cows and young bulls, in Ireland was 107% of the EU average price. While finished cattle price is obviously an important factor in producer margin, it should not be the sole focus. Of equal importance to the margin of a beef enterprise are EU direct payments and on-farm efficiency.

In the aftermath of the launch of Food Wise 2025, the Government, at our request, established a meat implementation group to identify the key policy measures needed for the various meat sectors in order to ensure delivery of growth. Among the most critical issues is Brexit, in respect of which the report highlighted the need for the Government, with EU support, to put in place robust measures to mitigate the worst effects of a no-deal Brexit, while also recognising that any post-Brexit arrangement will leave the Irish beef sector most exposed and facing additional costs. While the risk of a no-deal Brexit has receded somewhat, it would be foolish to dismiss a crash-out by the UK entirely, given past experience in securing consensus in the UK parliament on an agreed way forward, which still remains elusive.

Chaos would ensue were the UK to leave without a deal. This would be most acute were exporters to be faced with a tariff wall on entry to the UK market of such proportions as to effectively close that market off to Irish beef and, by doing so, open it up to cheaper and lesser quality product from elsewhere in the world. Such a course would have devastating implications for the trade and in turn would cause untold damage to beef production in Ireland. That is why we need a Government guarantee that support mechanisms will be immediately available, delivered efficiently, and applied at the point of trade in order to eliminate the ensuing market values loss extracted by the imposition of tariffs and to achieve the objective of keeping Irish beef supplied to the UK market. Anything less would risk relinquishing our share of the UK market to other global suppliers.

During the uncertainty that reigned as the March and April Brexit deadlines loomed, Irish beef processors continued to process animals while facing the real risk that meat from these animals might not have been able to enter the UK market or, if it did, risk the market return being seriously devalued due to the high levels of tariffs and restrictive import quotas which had been indicated by the UK Government.

The meat implementation group report, which was presented to the Minister in November 2018, stressed the group's view that beef from the suckler herd is of critical importance for the international marketability of Irish beef abroad and for the health and viability of the rural economy in large parts of the country. The report also expressed concerns that very low profitability would lead to a sharp drop in suckler output thus risking long-term overall growth in respect of the Food Wise 2025 ambitions. The possibility of introducing some form of targeted support for this sector was recommended by the group. However, it accepted that any such measures, in addition to providing income support, should be clearly geared towards bringing environmental and animal welfare benefits. We support this approach.

Furthermore, we agree that the rapid expansion of the national dairy herd must serve to enhance the quality of both meat and milk products. This will involve a breeding programme that will improve the metrics across both herds in the context of ease of calving, gestation length, and improving the market suitability of beef calves coming from the dairy herd. MII welcomes the introduction by the ICBF of the dairy-beef breeding index and encourages all stakeholders to promote its uptake.

We also endorse the need for a continued drive on market diversification, not only because we want to secure access to many target markets across the globe in order to bolster our international presence, but also to broaden the scope for stronger market returns and as a protection against periods of volatility in different markets that occur from time to time. In the post-Brexit period, which could potentially herald the commencement of a changing landscape for exports, diversification will be subject to renewed focus. Now more than ever, we need to take every single opportunity to broaden our horizons. While doing so, there needs to be a full awareness at farm level of the absolute need to deliver animals that meet market specifications, bearing in mind that product from individual animals may serve many different international and European markets.

Also regarding market access, MII stresses we can no longer tolerate efforts to chip away at our valuable EU markets in beef. We need the Government to resist any effort to broaden and implement an EU-Mercosur free trade agreement, and other agreements, that would further weaken our market position in the EU.

Climate change and its association with above average greenhouse gas emissions from the agricultural sector has attracted a relentless focus in recent years and this is not likely to dissipate any time soon. We accept that agriculture accounts for a sizeable proportion of Ireland’s overall emissions, this being principally due to the strategic importance of agriculture to the national economy. While recognising we need to continue to work to reduce the environmental impact of agrifood production systems, Irish beef production has strong environmental credentials and is among the lowest in greenhouse gas emissions intensity per kilogram of output in Europe and globally. Our sector, at farm and factory level, is doing its utmost in its efforts at mitigating the effects of climate change. We fully acknowledge that we can and must do more. We will be happy to discuss with the committee the intensifications of actions that we believe can deliver results.

It is also the case, however, that Ireland’s grass-based system gives us a unique advantage in the production of beef. The sector must continue to focus on sustainable intensification, on driving increased efficiency and improving productivity. We also need to play our part at industry level and maintain a strong focus on delivering on a range of sustainability measures. We can approach this challenge knowing that progress on environmental performance of beef enterprises will also benefit economic performance. A renewed focus on the environment as part of CAP 2021, properly resourced, can make a major contribution to achieving these aims. On the subject of the CAP, MII strongly supports producer calls for the maintenance of funding in the next CAP post 2020 and the delivery of support to active producers.

The beef sector is critical to the rural fabric of Ireland. It is a key generator of economic activity in rural areas and Irish beef has a strong reputation in the marketplace. Our suckler herd and our grass-based beef production have an important role to play in the future of our agrifood sector and in ensuring balanced growth in agriculture. Progress has been made in output, exports and prices over the past decade. Farm enterprise margin remains a challenge but margin is not about price alone. While we face big challenges, we do so with the collaboration of stakeholders and Government as we jointly work towards the successor to Food Wise 2025.

Chairman

I thank Mr. Carroll for his presentation. We will now take questions from members. Deputy McConalogue was the first to indicate, then Deputy Martin Kenny, followed by Senator Lombard. I call Deputy McConalogue.

Deputy Charlie McConalogue

I thank the Beef Plan Movement and Meat Industry Ireland for coming in, making presentations and contributing to this important work in respect of the committee's objective of trying to put together a report which will help to provide a sustainable and profitable future for the beef sector. I also acknowledge the strong work the Beef Plan Movement has done in engaging with farmers. It has certainly gained much support in recent months. I have specific questions for that organisation regarding recognition and the thresholds for recognition as a farm body. Where does the Beef Plan Movement stand with that issue? Has it made an application and received any feedback from the Department in respect of getting representation on the various committees that approved beef and other farming organisations sit on?

The core of the Beef Plan Movement's proposal is a need for an increased focus on the role of producer organisations. I refer to farmers operating and working together to try to achieve better outcomes and better margins for the primary producer. We have heard the meat industry make the case that last year it was paying 107% of the EU average. I am interested in the Beef Plan Movement's perspective and its sense of and response to that claim. What markets does the Beef Plan Movement think the meat industry should be targeting to achieve increased prices? I would also like the representatives from the Beef Plan Movement to elaborate further on the 125 km category 1 waste transport rule. What impact is that having on the sector?

Moving to the representatives from Meat Industry Ireland, I want to again focus on the claim that 107% of average European prices was paid across all categories of beef in 2018. What is the equivalent percentage paid by processors in 2019? I understand it is below the EU average. It has been at different times, at least, even if it may not be at the moment. If 107% of the average European price was paid last year but less than 100% now is being paid this year, where is that extra percentage going? Is it the case that because there is an increased supply of beef that the meat industry is using that fact to depress prices and increase its own margins as a result? We need an answer on that issue because it is one of great concern. As the representative from MII will be aware, the strongly held view among the farming community is that when the numbers of cattle go up, we see processors depress prices and increase their margins as a result. It is always the farmers who are squeezed and they do not get the opportunity to increase their margins. They are, more often than not, making a loss. CAP payments to those farmers amount to more than the net income on beef farms.

Regarding the information available to the meat processing sector, at the moment it has complete visibility of the number of cattle in the country, the ages of those cattle and how they are coming through the system. Farmers rightly question why meat processors should have full access to the numbers of cattle on farms. Having that information means that the meat processors know, down to a tee, what is coming through the system. That information can then be factored into calculations and can affect the prices being paid. Why does the sector need to have that level of information? I argue that factories should not have all of that information and should not know what numbers of animals are coming down the line. Turning to the issue of the 125 km category 1 waste transport rule, what is the perspective of the MII on that issue? Is it depressing the capacity for competition in the meat processing sector? Why does that rule have to be there?

Regarding the four-movement rule, the 30-month rule and the 70-day retention rule, there seems to be no valid basis for those rules to apply any more. There may have been a case for them when there was a problem with bovine spongiform encephalopathy, BSE, in the past. That might have been part of the rationale for the 30-month rule originally, for example. That is no longer the case. Farmers cannot see why those rules are in place and they feel the rules are there to depress the capacity for competition in the system. I ask the representatives from the MII to address the rationale for those rules. We need to look at removing those rules in order that there can be proper competition and capacity for farmers to have options in how they go about selling their cattle.

I will move on to the issue of proper payment for the quality of beef going through the beef grid. I also refer to paying quality assurance prices for all animals that are quality assured. The processors market meat that is quality assured but do not always pay for it because of the rules and criteria that have to be met. The report we are working on is intended to plot a profitable and sustainable future for the meat sector.

What are Meat Industry Ireland's projections for the sector's development and the future outlook for meat prices and demand? Farmers will not keep producing unless prices increase. I would be interested in getting MII's perspective on how prices will change in the medium term. What is the beef industry's perspective on the comparison between dairy-bred beef and suckler-bred beef? What is the potential for increasing the price for suckler-bred beef?

What percentage of all our beef exports are sold outside of the EU? What cuts of meat are exported to markets outside of the EU? From figures I have seen, more than 90% is exported to other European Union countries. The consumption rates there are static. What is the potential for increasing sales to non-EU markets?

Finally, we all know that there has been an increase in the amount of stock on the market in recent times. The meat sector knows that. Why has the meat sector not been able to work with the country's marketing agencies in advance of that to ensure that additional markets are available? If there are increasing numbers, we should find a market for them in order that farmers do not suffer because of the oversupply of cattle.

Deputy Martin Kenny

I thank the Beef Plan Movement and Meat Industry Ireland for coming in and making their presentations. The Beef Plan Movement has achieved great traction around the country in recent months. The crisis that we have become used to has deepened into what might be called a super-crisis. We have heard a lot of what was in those submissions at the meetings we have attended around the country. I would like to address a couple of things. What advantages do the witnesses see in suckler-bred grass-fed beef? Why should that advantage be acknowledged and the product given special status? That is the first point. Personally I think it should be given special status to some extent. If we can raise that tide it will lift all boats.

The Beef Plan Movement's presentation ended with four asks, concerning the four-movement rule, the 70-day residency etc. If those goals were achieved what impact would they have in the short term, say within a month or two months? Why does the Beef Plan Movement believe they are so vital now? Where would achieving those goals leave us? Why would they make such a big difference in this market system? The market system is flawed because markets are always flawed, with forces pulling in all directions. Would they have an immediate impact on a market which is clearly over-supplied?

Of the issues raised by Meat Industry Ireland, I am concerned by the goal of producing 80,000 additional tonnes of beef for international markets. This would be a 20% increase. While I acknowledge that this would come mainly from the dairy sector, I note that farmers out there are losing money at the moment. This is really saying to them that they need to produce more or lose more money. That is how they see it. The vast majority of farmers in that position are concerned that if production increases even more it will depress prices even more. I would like the Meat Industry Ireland representatives to deal with that issue.

The other issue, which concerns both groups, concerns the international marketability of Irish beef and its uniqueness. I have mentioned this here before. I am always going on about the family farm and the grass-fed system, that is, the unique selling points of Irish beef. In my view we are not getting anything like the potential return on that. For cattle prices to reach just 107% of the average EU price is quite frankly ridiculous, given the product we supply. We should be receiving 140% of the EU average. That is what we should be targeting. People in the meat industry tell me that is not possible right now in the context of the international markets we work in. Maybe it is not. How do we put ourselves into a position where it is possible? At some point somebody decided that Parma ham would get the highest price in the world. A group of people sat down somewhere and worked out how they were going to achieve that. Public representatives, people from the farming community and people from the meat industry all have a job to do. Irish beef is a prime product. We must get it sold as a luxury product, at the highest price possible. It may mean reducing productivity for a while and then building it up again when we create the demand for a luxury product, into which I believe we can turn Irish beef. Doing that will require the co-operation of everybody. That is the challenge for everyone. People talk about cartels and all of that. We are where we are with regard to the meat factories. The meat factories are corporations and they have boards. The job of those boards is to show a better return for their shareholders every quarter. We must argue that the best way to give those shareholders a better return, not in one quarter but in ten quarters' time, is to come up with a strategy which puts Irish beef at a premium in the world market. We all have to work together to achieve that.

The witnesses fully acknowledged that more has to be done. We should not let the opportunity presented by this crisis go. We should use this crisis to put the Irish beef sector into a new place. I understand that today we are primarily talking about suckler beef. We also have to acknowledge that beef will always come from the dairy herd. That beef also has a value. We need to work out a solution for that too. We all need to collaborate to do that.

Meat Industry Ireland's submission acknowledged that the Irish grass-based system has a unique advantage. So it has. Quite frankly we are not taking advantage of that uniqueness to anywhere near the degree that we should. A couple of weeks ago I spoke to a farmer in Leitrim raising suckler cows. He said to me that he was cutting back and would have less than half of his current number next year. He said that he was getting a few bob from the single farm payment. He saw no point in enduring the hardship of rearing calves and weanlings and getting them to market only to sell them for half price. That is the way he saw it. We need to provide an income for these people. The whole industry must work together to do that.

I thank the Chairman. There is quite a range of questions there. I will try to deal with some of them, and my colleagues might add to some of the detail that I do not have. On the question of a cartel, which Senator Conway-Walsh referred to, that has been referred to by the Beef Plan Movement as well. That seems to have emerged without any evidence at all being advanced by anybody. It is a bit of an old chestnut. It has been around forever, in a sense, but the reality is, and I think people should be aware of it, that the Competition and Consumer Protection Commission has looked at a number of cases over the last two or three years, which have involved takeovers and mergers.

It has looked at every one of them. Many contrary views have been expressed to it as to whether those mergers or takeovers should be allowed. They have been analysed not only by the Irish competition authority but also by the European competition authority. I can recall at least three cases - there may well have been more - which were allowed by the competition authority. They all happened within the last two or three years. There is nothing new about it coming up, but when those issues have been looked at the view of the competition authority was that the concentration resulting from those particular mergers and takeovers has not had the effect that people allege it has had.

Senator Rose Conway-Walsh

Were there any caveats on that in terms of the limit of the data that were available to the competition authorities in assessing it?

Mr. Philip Carroll

I am not aware of any caveats. These were all cleared at the first hurdle, from my recollection. None of them, as I understand it, had any restrictions applied in respect of the ask that came in terms of applications.

Senator Rose Conway-Walsh

That is not my understanding because Peter Bacon referred to this matter a number of years ago.

Mr. Philip Carroll

The Senator is going back much further than I am. I am referring to three decisions that were taken within the last two years, possibly slightly longer ago.

Deputy McConalogue referred to the price. I mentioned in my opening statement that the meat factories were paying 107% of the EU average price over the course of the year. That was the average price for the year, and at various stages during the course of the year the figure was as high as 112%, particularly in the early part of the year. Prices softened considerably towards the end of the year, for a range of different reasons, including many developments that occurred at European level. These included higher levels of production, a significant increase in cow culls during the course of the year, a surplus of supply on the market, increased imports from Brazil and Argentina and, in the later part of the year, the impact of Brexit. People have spoken about the anxiety caused by Brexit, and the issues that resulted from a softening in demand across Europe and a particular lack of confidence, investments and contracts as a consequence of it. It should be remembered that Brexit was due to happen on 29 March and then on 12 April. It might still happen on 22 May, for all we know. The anxiety around Brexit remains, and that anxiety meant that factories had to make decisions over the course of that period - not just Irish factories but also those exporting from Denmark, France and the Netherlands in to the UK - across different ranges and categories of products. Those exporters had to consider what the situation would be if product was moved to the UK ahead of Brexit and what the dynamic would be. Any movement of goods before Brexit would have been met by a storage problem as there was nowhere to put those products. If the products found their way to the UK and the circumstances around Brexit changed, it could well have led to market losses. If the products were not brought to the UK, it would have meant that companies ran the risk of not being able to cover the cost of that product after paying 40% more than they could afford to pay if they had faced a tariff going into the UK. The market has softened over that period because of all of those sensitivities and what was happening on a broader EU level. Mr. Healy might talk about where we see the market going in the latter part of this year. It must be remembered that a decision on Brexit by the UK Parliament has proved elusive thus far, and that has led to uncertainty which is still hanging over the market.

Deputy Charlie McConalogue

If the overall market is softening, why are prices here falling below the European average? The price should be softening everywhere. I did not refer to the differential between Ireland the and UK market in my initial comments. Will Mr. Carroll address that as well?

Mr. Philip Carroll

There are a few factors at play when it comes to the differential. We have seen a significant softening of the UK market. The UK price has come back, and I cannot say off the top of my head what the figures are. The differential has narrowed by a very significant amount - around 80 the last time we looked at it. That is indicative of what is happening in the UK market. We should also note that Ireland, more than any other country, is exposed to the UK market, and that it was the dominating interest in the overall price. The final point to make is that we export 90% of what we produce. When we talk about the domestic market we are really talking about the UK and Europe. We do not think of international trade as domestic. We know how important our real domestic market is, but it represents only 10% of our output. The real market is overseas because that is where we deliver product.

Deputy Martin Kenny mentioned that when volume is up market is down. That is not quite the case. It happens, certainly, and is happening in the context of developments in markets generally. We can have a discussion about where the EU market has been and where it is going over the next period. We carried out an analysis of this for the round table discussions on beef and in more than 50% of incidences where the volume went up the price also increased. That was assessed independently in the context of the round table discussions on beef. To say that when volume goes up price goes down is not accurate. That has not happened in most cases.

The Deputy also asked about the live trade in the context of Brexit. To my knowledge, there has been no discussion about what to do about that. The Deputy said that processors have had discussions. It is true that they have commercial manufacturing outlets in the UK, which is a bonus for them. That is why we are such a strong exporter and have such strong companies. There is no question or suggestion from any processors that I am aware of that the live trade is a possible antidote to a tariff-burdened UK market. That is the case for a variety of reasons.

The issue of four movements was mentioned by many Deputies, as was the 70-day rule and the 30-month rule. We have spoken about all of those. The 30-month rule works against processors and farmers. We did not put that rule in place, but it is demanded by certain buyers of product. Principally, the requirement for the 30-month rule emerged in the aftermath of the BSE scare and goes back to 1996. It is a requirement in international markets in most certificates that are now signed off between the Department of Agriculture, Food and the Marine and the importing country. The importing country calls the shots on that. It sets down that requirement, which is absolute. It does not help companies in many of those countries because product has to be differentiated and selected out. It is also an issue in European markets and the UK market, and is a requirement of retailers.

It is a requirement for retailers. The 70-day residency rule has a similar effect. Farming organisations were not happy to hear about these rules as they evolved in recent years. The requirement for them was independently assessed by Bord Bia for the beef round table. It checked to establish that those requirements were demanded in the marketplace. In any supermarket nowadays, as one will see on the packs at retail level - not only in beef but in various sectors of the food industry - the demands that are placed on processors, in Ireland and every other European country, are established by retailers and are visible in every supermarket. Pack size, price point and various related issues suit the retailer-consumer dynamic.

The four-residency and the 70-day rules are not absolutes for any farmer who supplies. They are a requirement of customers. For most customers, the product that meets the criteria of 30 months, 70 days and four movements commands the best price in the market because that is what the customer demands. Whether we like it or not, we always say the customer is always right, even when he or she is wrong. That is the requirement in the marketplace we must meet. If we do not, someone else with greater capability will, and we will be shunted out of the market. More than 90% of product delivered into factories meets the four-residency requirement. Farmers have made those decisions even though they do not have to.

Senator Conway-Walsh asked how many owners there were among the 35 plants. I think the figure is 13, four or five of which have more than one site.

Senator Rose Conway-Walsh

Is it 13 separate owners?

Mr. Philip Carroll

There are 13 separate companies, with separate owners.

The Senator also asked about the Beef Plan Movement's suggestion that there should be a representative of farmers on factory floors. I do not know how that would work or what would be the view of the Department of Agriculture, Food and the Marine in that regard. Our export factories are all licensed by the Department and supervised by a permanent team of veterinary staff, including a veterinary inspector with overall responsibility for the plant. There could be 12 or 14 temporary veterinary inspectors, contracted by the Department, in a plant every day. They supervise the kill line, the boning hall, the intake and everything else that goes with processing in plants. A range of technical agricultural officers are ever present in plants, although I could not say how many there are, and the number has recently been increased. The competent authority for all matters concerning meat and dairy production and processing is the Department, and I cannot see a role for anybody else in that process. It is the authority that determines the rules and regulations, which it is mandated to do by the European Union.

Mr. Healy might elaborate on a few points.

Mr. Cormac Healy

I wish to add value rather than repeat the points made by Mr. Healy. On the point about Brexit and the possible alternative in a no-deal Brexit with the imposition of tariffs and quotas, Deputy Martin Kenny asked whether people would go down the live route. As Mr. Carroll indicated, we have neither seen nor heard signals of that but it would ultimately be counterproductive. We have often made the point in meetings of this committee that the cuts from any one animal processed in Ireland are exported to a range of markets. By and large, a total of 50% of the beef is exported to the UK, but cuts are exported to a range of markets, many of which are in the EU, as Deputy McConalogue noted. In a no-deal crash-out scenario, if an animal is processed in the UK, some of the product from that carcass will be sold in the UK market. All the other cuts, however, that are required to be sent to other EU member states will suddenly be faced not only with a UK tariff but one which is twice that. If the EU tariff is X, the UK has proposed tariffs on beef at approximately 50% of that level. It just would not work and would be counterproductive, although it is no harm to address it because it has been raised. Furthermore, people have serious investments in plants and facilities throughout the country. Their investment is intended to continue processing here and the desire is not to go in another direction. It simply would not work in a no-deal scenario.

Mr. Carroll has addressed the issue of moving and the criteria of being under 30 months and 70 days as requirements of the marketplace. It is not just a matter of commercial customers in UK retail or some of the continental retailers. Increasingly, with access to new international markets, we are faced with some of these requirements. The rule for supplying China is that the cattle must be below the age of 30 months, as it is for Japan and various other markets.

Deputy Martin Kenny

My understanding is that it was more like an offer that was made. When beef was being marketed as from Ireland it was stated that we have these rules in Ireland and the cattle will be under the age of 30 months. It was an offer made rather than a requirement and it became the norm. We have all acknowledged a certain absurdity in it. It grew out of the 30-day rule following the BSE outbreak. Surely an argument to revisit that rule can be made. Our unique selling points are not the 30-month or 70-day rules. They are about being grass fed, family farmed and so on, which we are not using when we market our beef. We need to have a conversation about that.

Mr. Cormac Healy

By and large, if we have access to an international market, it is negotiated between the competent authorities of the two countries, that is, government to government or veterinary authority to veterinary authority. We want a certificate that is open because as we have outlined previously, with a range of international markets outside the European Union, sometimes different conditions can be set and ultimately it is almost a matter of killing different animals to try to match every market. It is certainly not an offer to international markets that we can do this, that or under 30 months, but that is the international standard. It has not just been set for Ireland but for other countries too. That is the standard being set by competent authorities in other countries. A further challenge is climate change and the efficiency of our production. Nobody is claiming that the older the animal, the more efficient it is. The criteria, therefore, go against that argument. There are production systems, not only run by Teagasc or as demonstration farms, with commercial farmers that produce and finish steers at far less than 30 months, but it is a challenge to the climate change discussion if it is argued that animals should be killed later in life.

Deputy McConalogue asked about exports outside of the European Union.

Of our overall beef figures that market is in the region of 5% at this point. That has been growing. It ebbs and flows a bit. It has been down in 2018 compared with 2017 because of an absence of activity in the market in the Philippines and due to product not being as competitive as the previous year in getting in there. Overall third country markets account for around 5%.

The view was expressed that extra stock or product was coming through and why did we not do something on it. I would say that the industry has done something. It is not just this year. Slaughterings this year are up 30,000 head for the year to date. Over the previous two years slaughterings were up 10% by 160,000 head. The industry processed all of those and found homes for them, but we are not immune to the reality of what was going on in markets. That is a part contributor to the price now, which for Ireland is hovering just below the 100% of the EU average. We have taken a severe hit in our position to return our price because of additional production, especially in the second half of last year due to the drought situation across Europe. The European Commission's Directorate-General for Agriculture and Rural Development has clearly set out the view that the substantial increase in product on the European market has had a negative effect. The European Commission said that last year there was an additional 200,000 tonnes of product on the EU market by virtue of increased production, lower exports out of the European Union and increased imports into the European Union. The combination of these three factors has led to additional product on the market, which has impacted and - as Mr. Carroll has said - this led into the period of further uncertainty we went through over the last months in the context of Brexit.

On the issue of dairy and beef sucklers - this might touch on some of the points raised by Senator Lombard on the future of the sectors - there is ongoing work around output from the dairy sector and the need for an improvement in the beef element coming from the dairy sector. This needs to continue with regard to best available bulls, that decisions made by dairy farmers are not completely based on ease of calving and short gestation, and that some credence, effort and account is taken of the need for an animal that is suitable for the market.

I am looking for clarity on the response I received to my query on the future of the beef industry. I have read the report from the MII and I still do not see its vision for the future of the beef industry. I also do not see the vision regarding where the suckler cow ties in with the vast numbers that have declined in the last years. Perhaps the witnesses could give clarity on where they see it going with the vast numbers of dairy cows coming in and suckler cows decreasing. I am trying to get a handle on the numbers of suckler cows the MII believes it will have in a few years' time. This is not Brexit oriented: it is about market trend and what we may have seen in the past. The comprehensive report does not give me that future, a vision or a template of where the MII sees the industry going. We are now trying to review 2025. For that to happen the meat industry and Meat Industry Ireland need to come forward with their views on where that future is going to be. I am not happy with the documents it has supplied to me because they have not given its views on the vision going forward or where the industry is going. My question was where do the witnesses think the industry is going.

Chairman

There were a couple of related questions that the witnesses may have missed, one of which was the possibility of contracts being put in place in the future. Other questions by members related to access to data and the numbers and to transparency.

Mr. Cormac Healy

On the issue of the future for the industry, we have set this out in a document on the future of the Irish beef sector. After Foodwise 2025 was published the industry itself set out its views on what was achievable and what growth it felt was possible in the sector. We put that out and published it, and we were before this committee with it. I shall refer to some aspects of it. On the expansion in dairy we had envisaged - with a vision, a want and a wish that the suckler herd is maintained in Ireland - that somewhere in the region of an additional 80,000 above the production on the baseline would be possible. Sucklers were very much part of that vision.

On the question of where product would go, we are going to remain largely focused on the European market and will try to continue to increase the profile of customers that are available for the European market.

Brexit is a big issue in respect of the outcome. I am happy to come back and go into more detail on that topic. Regarding contracts, there is some level of contracting between processors and farmers but it is not substantial or significant. The industry is not against it by any manner or means. A form of contract and forward pricing arrangement was announced two weeks or ten days ago by one of the companies in co-operation with one of the dairy processing co-operatives. Other contracts are in place in respect of specific breeds, production systems or supply at particular times of the year. There is, therefore, some level of contracting going on. Does it need to increase and would it be better if that happened? Yes, probably. Are there back-to-back arrangements everywhere regarding contracts in the marketplace for processors? No, there are not and that has to be worked on.

I am coming at this from a Charolais perspective. We are just after setting up this organisation in the last six months or so. There was a question on how we have been received by the stakeholders. We have been refused admission to the tuberculosis, TB, forum at our first attempt, unfortunately. The Beef Plan Movement has been excluded from a forum discussing future plans to mitigate against the risk of TB in this country. We have also asked to be part of the bovine viral diarrhoea, BVD, forum and that comes under our animal health committee. We have been told to apply to become affiliated with Animal Health Ireland so we can then be invited back into the BVD forum. Those are two immediate examples of roadblocks to getting our voice heard at tables.

We talk about ourselves as an organisation seeking recognition for the number of farmers we represent. It is important that we get some transparency on that issue because other organisations also claim to represent beef farmers. We have spoken to some 20,000 members in marts and town halls in recent months and they have said those organisations have not represented them as beef farmers. We would welcome more transparency regarding which organisation actually represents beef farmers and that being known to the public and to committees such as this. Beef farmers could then get recognition on some of the boards where we do not have a presence at the moment. Those are the challenges facing us as a fledgling organisation.

From a funding perspective, there is much talk about levies at the moment in respect of certain organisations. We would welcome a proper funding structure being put in place that recognises the contribution an organisation is making on behalf of the beef sector. Such organisations, which work for, truly represent and have the best interests of beef farmers at heart should be appropriately funded. Farmers could recognise that work by whatever means they see fit, if a structure was put in place. They could indicate they wished to subscribe to such an organisation, for instance. We are a voluntary organisation and no one gets paid. We do this work completely voluntarily and I think we have done incredible work in recent months to highlight these issues. As Mr. Corley stated earlier, many people have piggybacked on our work regarding these issues and now make them their own. When we look to find the actual origins, however, we must go back to our meetings in the latter part of last year and that is where the topics we are raising came from.

A question was also asked about the 70-day rule, the 30-month rule and so on. It was interesting to see mention made earlier of access to certain markets. Those markets represent 5% of the exports we sell out of this country beyond the European Union.

Some 95% of exports are to the EU.

On the website of the Department of Agriculture, Food and the Marine, it is noted that Japan is seeking to move the limits from 30 months to 36 months. That is specifically called out.

We have to be very careful about the language that is used around the 70-day rule and the four-movement rule, especially as it refers to consumers or customers. A retailer or buyer will suit its interests and will do what is required to maintain its retail share. Naturally, they will put criteria in place to protect their position. We need to be really clear that the opinion of the consumer - the person who consumes the product - be sought regarding what are the requirements for particular markets. Dominant retailers set the rules which preserve their own positions. This is very easy to confuse with the language used around customers, consumers and retailers. We have to be crystal clear on this. What does the consumer want? It should not matter what the retailer, which is interested in preserving its position of dominance, wants.

Senator Lombard made an assertion that we should be getting 40% of the EU average. I want to put something on the record concerning the idea of a price of 107% of the European average. An article came out at the end of December last year which alleged that this was the value that Irish beef producers were paid. We heard in previous submissions how important the suckler farmer is. I encourage members of this committee to visit the Bord Bia website and scrutinise that number. From the research I have done in preparation for the mart meetings that we have attended I know that for ten years, what farmers have been paid for the R3 and U3 category of cattle has been less than their counterparts in Europe. I am not talking about the UK, where there is a considerable difference, but rather our counterparts in Europe. For ten years farmers in Ireland have been paid less than the EU average for the EU 12 and EU 15. That information is available on the Bord Bia website. Those cattle will predominantly come from the suckler herd, such as R3 and U3 steers. They are not O or P grade but are of lesser conformation and come from dairy cross. For heifers, it is only in the past two to three years of that ten-year period where we have marginally been paid the same as the EU average for heifers. It is the same story for young bulls. This was the case throughout the period, with the exception of during the horsemeat scandal and in 2015, when we were paid slightly above the European average for our bulls. To support the assertion that we are receiving 107% of the European average one has to look at an O3 and a P3 cow, which is effectively a cull cow from the dairy herd. In that category Irish farmers have been paid more than the EU average. I want to make it absolutely clear that the 107% is tied to, underwritten and underlined by the category of animal slaughtered. We hear that the best interests of suckler farmers are being put forward by the meat industry in Ireland. We have been paid less for steers in the U3 and R3 carcase grades for the last ten years, as well as for heifers and young bulls in those categories, with the exception of one or two years. We have only been paid more for a culled cow in that period, which I suggest is not the best product we could market. I want to make sure that that important point is researched properly and that the claim of 107% is made in the correct context.

Other questions have been asked about forward contracts. This is very interesting, and concerns access to data. I am a part-time farmer, and I work in supply chain as my day job. I have bought materials, manufactured product and sold materials for 25 years. I have done this for US multinationals. If I know that I am constrained by a raw material, I can guarantee that my commercial team will not get my permission to market one product more than I can commit to supply. That would put me under pressure in terms of what I have to buy and what I have to pay forward to buy it. They will not be permitted to market more product than I can supply from the raw materials. If we tell the industry how much beef is in the system, beef being the raw material, I can guarantee that it will not commit to a contract it cannot supply or that would put them under pressure to compete for cattle in order to fulfil that contract. We have heard forecasts of six months, perhaps a little bit longer, indicating the numbers involved and the kind of agreement we will have. Those indicative numbers set the parameters within which we are able to commit to supply. By sharing information on the available raw material in the beef sector I can guarantee that the position will not arise that a company will overextend from a supply commitment that would put it under pressure to buy more cattle and drive the price up. That is how a market should work, from a supply chain perspective. It was suggested that we reduce the national herd. That would leave us in the same boat, because if we reveal the amount of available raw material in this industry, the sales commitments will match that at the other end. If we go from 600,000 tonnes to 400,000 tonnes we would be in the same scenario. The importance of not sharing that information must be made quite clear so that it cannot be manipulated in terms of speculating in sales contracts.

Brexit was felt by the Irish beef farmer a week after the vote when the price was cut. Brexit has already been felt by us. The meat industry in this country is adept at not wasting a crisis. Brexit has been a phenomenal success for it. It has had a two-year crisis. If the weather is dry there is a drought and the price goes down. If it rains, the price goes down. If the cat has kittens, the price goes down. It never wastes a crisis. Brexit has been felt by Irish beef farmers for the last two years. I would invite this committee to evaluate the dairy commodities that sell within the UK and how they have fared over the past two years. The dairy industry has the exact same parameters of uncertainty caused by Brexit, and I would look at how the dairy products in that market have faired relative to beef. The fundamental difference is that there is a co-operative-style approach. Co-operatives actually help their suppliers. In the beef industry there are what I consider to be monopolies that will do all they can to take as much out of this €2.6 billion industry as possible, with no foresight for the consequences for the suppliers in the future. The situation for beef producers at the moment is terminal. Other organisations are looking for payments of €200 per suckler cow. It would be far more beneficial to write the cheque, give it to the major players and tell them not to cut the price of beef any further than to give that money to the farmers. Administratively it would cost less. The major players are ultimately going to get that money; it is just a matter of how long it takes for it to percolate back out so that they can take that share from the farmer.

Mr. Hugh Doyle

I will be brief, because I appreciate the time-----

Chairman

We have more questions to be answered. We have a list of questions, and there will be more questions in a few minutes.

Mr. Hugh Doyle

I know that, and I will stick to the facts. Senator Lombard mentioned the survey. The Beef Plan Movement decided to carry out a quick survey last Saturday, and put questions to just over 10,000 farmers.

In a 24-hour period, 2,370 farmers responded. These are facts and the farmers are real farmers;28% percent of the farmers, or nearly one third, have said they fully intend to reduce numbers once the genomic scheme ends. The scheme was brought in a couple of years ago. Farmers cannot leave it until 2020.

Chairman

There is a five-year contract.

Mr. Hugh Doyle

If they do leave, there is a clawback. Some 28% of the 2,370 farmers said they are going to decrease their number of cows by more than 20%. In total, 52% of the farmers said they fully intend to decrease the number of cows as soon as the genomic scheme ends. I was actually disappointed we did not put a column in for more than 30%. These are real figures. Meat Industry Ireland can talk about want and wish but the truth of the story is that farmers are going to be leaving in their droves. Forget about the suckler herd being 900,000 in a year's time; if something is not done about contracts, the sector will be utterly decimated and there will be a drop to perhaps 300,000 or 400,000.

There was a reference rebranding and it was asked why we would rebrand. At a price of €3.70 per kilogram, there is nobody in Ireland making money. That is a fact. I am spending my children's inheritance every time I bring cattle to the factory. That is a fact. Let us be clear about it. The reason we have to rebrand is quite simple. The Origin Green label has been diluted. The reason it has been diluted, which we cannot get away from, is that the dairy industry has a proportion of cull cows of 20% to 25%. We cannot get away from that. The members should do the maths. About 280,000 cull cows are going to come from the dairy industry every year. That is manufacturing beef. What I produce in my suckler herd is retail beef. Manufacturing and retail beef are all being sold under Origin Green. It is an absolute disgrace. What we have to do in the beef industry if we are to survive as an entity is rebrand. I am not just referring to rebranding as suckler beef or grass-fed beef. I normally ask my two daughters what they would pay more for. One has to be environmentally friendly and health-conscious. That is what the householder wants. Meat Industry Ireland will tell one the market is not really too pushed about that. In England, Asda released a brand recently called Pasture Promise for the milk end of things. It refers to free-range beef and it is commanding a premium for it. What we need to do in our industry is raise the bar. We have got to go GM-free. That is what the market wants. We have to sell our beef as GM-free and grass fed. In one's local supermarket, one will see an eight-by-four picture of a continental farmer, with a big Charolais bullock or Limousine bullock, up to his knees in grass. One will not see a factory feedlot with 5,000 or 6,000 cattle. As Meat Industry Ireland would say and has said, those cattle are fed mostly grass. I have certainly never seen it and I have been through a lot of feedlots. I am not trying to denigrate Irish beef in any way but we have to be factual. What we have to do is look to meat markets where there is antibiotic-free beef. There is a percentage of animals produced in this country that never get an antibiotic. That has to be branded. In the past six to eight weeks, one could have fed vegetable oils through the meal to raise the level of omega-3. That is what the market wants. We have to be aware of what the market wants and give it what it wants. What is happening is that we are allowing our brand to be diluted. In doing so, it is bringing everything down. Suckler beef has got to get a new brand. We in the Beef Plan Movement intend to do that.

I will hand over to Mr. Corley, who is going to answer some of the other questions, because I am aware of the time.

Mr. Eamon Corley

I am not sure a question was asked about the first point I wish to address. I refer to the question of the role of Meat Industry Ireland. Deputy Martin Kenny talked about price and contract. An answer was not forthcoming as to price and contracts. If Meat Industry Ireland is not going to answer the questions, are we going to bring meat factory representatives in here to answer them? They are relevant to the debate. Is it the plan to bring meat factory representatives in here to ask them about price and contracts? Maybe before we go, the Chairman can ask the representatives of Meat Industry Ireland who are here what their role is.

Let me address Deputy Martin Kenny's point. We mentioned five steps that we believe could be taken straight away to improve things. One was to get rid of the four-movement rule. One was to get rid of the 70-day residency rule as regards the QPS bonus. Where the animal has been 70 days on the quality-assured farm, the Department either accepts the farmer is doing a good job or it does not. The animal will have been quality assured for the 70 days. If we can transfer the paperwork to the new buyer, that new buyer should be able to sell the animal directly to a factory. Therefore, there is no basis for what is being said. If we get rid of the two rules, it means the finished cattle can go back into the marts, and there will be open competition between the exporters and various factories. It would result in a little bit of competition that does not exist currently. That would be a big help.

Consider the rule on category-1 waste not being allowed to be transported more than 125 km. There was a case in Roscommon where a factory was told that, because it raised the price by 5 cent per kilogram, its offal would not be collected. Consequently, there was a smell in the town for two weeks. We talk about proving anti-competitive practices but there is one proof. The rule gives the dominant player an advantage. It rules against the small independent factories. If we got rid of the rule, it would encourage the small independent factories as they would have an independent means of getting rid of category-1 waste.

If we increase the lairage space in France, we will be able to get more calves away. This would mean fewer cattle when it comes to farmers selling their fit cattle. It would increase competition.

Finally, if we had an export subsidy for weanlings, the money would go directly to the farmer. Rather than paying a suckler cow premium, let us give the money directly to the farmer. It will result in a better price for suckler farmers who are producing the weanlings. It would mean fewer cattle in the country and more competition for what is left among those who finish cattle. I hope that answers Deputy Martin Kenny's question.

Deputy McConalogue asked about anti-competitive practices. I dealt with the four-movement rule. There is absolutely no sign to say the meat will be worth less if the animal has been moved four times. The rule should be scrapped. I have already dealt with the rule on 70-day residency. If Bord Bia is doing its job and there is a trail of paperwork with each animal, it should be acceptable to the next buyer, the supermarkets and everybody else.

I have dealt with the issue category-1 waste. The factory-owned feedlots are definitely used to manipulate the free market.

They are flooded at times cattle are in good supply to collapse the market. They are outlawed in the US; they should be outlawed here as well. Access to farmer data was mentioned. Meat factories knew since last September that there would be a glut of cattle. Did they find new markets for their cattle? They claim they need this information to react and sell supplies. They have not found markets. They allowed the supply of cattle to build up and happily collapsed the price. That does not work.

Chairman

We want to get other members in. I will let Mr. Corley speak again. I call Deputies Corcoran Kennedy, Fitzmaurice and Healy-Rae in that order.

Deputy Marcella Corcoran Kennedy

I thank both organisations for coming in to help us with this important report. I wish to ask both organisations if the Food Wise 2025 targets are sustainable. From what we have been hearing and from what people are experiencing, it seems to be an ambitious policy. Feedlots were referred to earlier. I have a clear view of the Beef Plan Movement's position. Does Meat Industry Ireland have a view on feedlots and the impact they may have on the image of our grass-fed beef?

Could the representatives of the Beef Plan Movement expand on the blockchain proposal in their report? Moreover, there has been a bit of to and fro about lairage. Who should pay for lairage? Meat Industry Ireland might refer to that as well.

I would also like to ask both groups if the model associated with Glanbia and Kepak could be a direction for the future. Is it what the producers or the industry want?

My other question is for Meat Industry Ireland. What exactly does the market want? What are the processors looking for in steer beef? Are they looking for smaller carcasees? If they are looking for smaller carcasees, does the suckler herd produce them? Does the Beef Plan Movement have any views on convergence proposals for the CAP?

Deputy Michael Fitzmaurice

I thank the witnesses for their presentations. I have a suggestion which may be worthwhile in trying to solve the problem. I am not on the committee and it is up to the Chairman. The 125 km distance limit for waste transport is a matter for the Department of Transport, Tourism and Sport. It may be worthwhile for this committee to make a submission to that Department on that. That is up to committee members. The Chairman might recall that there was previously a rule on moving straw. We need to tackle that.

Chairman

We may examine that.

Deputy Michael Fitzmaurice

I am just putting it out there. What is the Beef Plan Movement's position on forward contracts with retailers and developed a new brand of suckler beef?

What are the views of the industry representatives on climate change and sustainability, which everyone is on about, in respect of the suckler herd and how we go forward on that? According to what they have told us, 338 feedlots produce 18 or 19% of the beef in the country. That means if we keep going down the road we are going down, approximately 1,350 farmers will be able to produce all the beef in this country, based on what was required last year, if one does the figures. Is it sustainable for 338,000 farmers to run through 1,000 cattle each, and will their products be sold abroad stating that they were reared on grass? I come from a farming background, as do most of us here, so let us be honest. The small family farm produces an animal reared on grass, but these cattle are in sheds most of the time. Let us not be codding ourselves. It is time we call a halt to the feedlot system, which is mostly controlled by factories, and they should not deny this. There is a back-door system within it, so if cattle are not coming in the front door, they are coming in the back door. That has to be called out once and for all. Are the representatives afraid of that, or worried about it?

I agree that retailers such as Aldi, Tesco, or Lidl, will say they want 30-month meat, and that is fair enough. Are the industry bodies in favour of working with the Department and farming bodies to go to those retailers and put a proposal forward that if one has a Bord Bia-approved farm and an animal is on its third movement, there should not be a problem? The same animal welfare regulations apply no matter where one goes. If a farmer sells to someone who is Bord Bia-approved, and he holds that animal for the 30 days, he is entitled to do so provided they are Bord Bia-approved. The representatives said they have scientific evidence, but I have the facts regarding what happened to farmers. Last May, if a farmer had cattle over 30 months with eight movements, and every dot joined, he got the flat rate for them regardless, for both heifers and cows. There was one simple reason, which was factories had their tongues out for them. Cattle were being killed with no questions, and I will show proof of it. Why then was it the case that all these rules were needed three, four, or six months later? Why were farmers whose animals were under 22 months ringing factories and not able to get their cattle killed? They got hit because they went over 22 months. Why was there a clause brought in halfway through, that was then gotten rid of when a specification under 440 kg was brought in? The fellow who had the big Charolais bullock was gone out the gate. He was cut down. Every excuse was used, and I will make no apology for saying it straight.

What has been done to farming communities and small farmers in this country over the past six months is outrageous and scandalous. The representatives said that there are 34 or 35 factories in this country, and they talked about employment, but I can guarantee, one can pull a dog's tail for as long as one likes, but sooner or later he or she will to bite, and farmers are ready to bite now. It is going to go one of two ways. Those farmers are going to get out if they are not treated right by the factories, or we are heading for landlordism with the Beef Plan Movement's 1,300 friends will produce all the cattle in this country. The representatives might not like to hear that, but those are the facts on the ground when one talks to the farmers. They can use all the scientific evidence they want. There is a problem because we have extra cattle to get rid of, and I agree that we need to work with exporters. I come from a suckler neck of the woods, from Donegal down to Clare and out to Longford, and it is at a low ebb at the moment, because beef farmers are sick to the teeth of factories and of losing money. I am not against factories; these are just pure blunt facts. If they want to ensure factories and farmers are sustainable going into the future, the facts need to change fairly quickly, or it is over. I thank the Chairman.

Deputy Danny Healy-Rae

I thank the Chairman. I am glad to get this opportunity, and I would like to welcome Mr. Corley and the meat industry representatives. When I look across at him, I immediately think of the thousands of people who attended the beef plan meetings all around Kerry and west Cork, because I attended each and every one of them as well. I only wish that a lot of them were looking in today to see what is going on, because their lives and enterprises are on the line. I am not making this up. Mr. Corley asked about allowing a farmer's representative into the factories, and Mr. Carroll said that he did not see what benefit that would have. I can tell Mr. Carroll that farmers' trust in factories is at the lowest ebb it has ever been. When they attended the beef plan meetings, the only wish, hope, or expectation they had was that more live exports could be accessed so that there would be competition in the trade, and that meat factories and beef processors would have to pay a fair price. That is all farmers want.

I have been a farmer since birth, and I bought my own place in 1988. I put down some of the money and borrowed the rest of it, and paid it off over ten years. The farm paid for it. There would be no hope in the world of doing that today. I could not do it. No one could do it. That is the way it has gone; it has gone totally into reverse. The reasons the industry representatives been given for holding onto these rules are not satisfactory. I appreciate that they are doing a job. They are paid to come in here today on behalf of the meat industry and meat factories, but time is running out for them because farmers are not going to take it. I said earlier that there was an IFA meeting in Sneem the other night. Eight farmers attended, who were all over 75 years of age, and it is much the same in Killgarvan. I know what is going on around the whole circuit, and that is what is happening. Young men are not interested and they are not going to continue at it. As Mr. Doyle said, a lot of farmers will be getting out once they can escape from the beef genomics scheme. They are getting out as it is, because they have gone to do other things. It is sad to see what is happening in our neck of the woods, because farmers had invested an awful lot in slatted tanks. They paid for them, they got grants and they were helped and assisted. In many cases more of them did not get grants, but they had wives working in one thing and another. They took a decision to try to keep the farm enterprise going and they realised they had to comply with the environmental regulations and all that went with them. They hoped that it would turn around, but it is not turning around. It has gone full circle and it is now so bad that I do not know how it is going to be retrieved.

There are smart men here. If we hung a carcase off the roof, could anyone tell me how many times it has been moved?

I am asking the witnesses that question. Could any of them tell me how many times that carcase had been moved? A farmer asked me the other day to highlight that these young calves should not be included in the four-movement rule when they have not even been tested and sold inside the mart to the first man and then to a second man. That is totally wrong and there is no need to include them. I do not know who thought it up but I can tell the witnesses and committee that it is not benefitting the farmer or the people Deputy Scanlon, other members and I represent.

We talk about climate and carbon footprints, which is a lot of nonsense to me. We hear the Taoiseach saying that he will reduce his meat intake to reduce his carbon footprint. Another fellow is sending literature advising children to schools with the approval of An Taisce. This, again, is hurting the farmers and the fellows producing beef.

That is another question. The witnesses talk a lot about the UK and Brexit. It is time the UK made its mind up as to whether it is coming or going but the price is already lower for animals and beef we are exporting to the UK. What is the reason for that? I have already asked this question in this forum.

The other thing is-----

Chairman

This is the final question. Deputy Scanlon is waiting anxiously to ask questions.

Deputy Danny Healy-Rae

Farmers are being told one day that the factories do not want black Limousin cattle but rather that they want red Limousin cattle. They are being told that they want white Charolais but not brown or grey Charolais. What is the difference in the bloody meat when the carcase is taken off them? That is why the farmer is being blackguarded and driven down to the ground. However, he will not stay much longer. I do not know the witnesses from the sky over them and have no personal gripe with any of them but I say to them and whoever is paying them that if they think that as a result of prices for farmers being kept down, there will be three of them here all the time, they will be reduced to two or one because it will not continue. That is the truth.

Deputy Eamon Scanlon

I will be brief. I apologise for missing some of the presentations. In fairness, farmers are business people. The witnesses represent a business organisation. Farmers cannot survive if they do not make a profit and if they do not survive, the witnesses will not survive. This is where it is heading and we are very close to it. I believe the witnesses said that we have 34 meat plants in the country. If we look at the papers and prices, we can see that there is not five cent in the difference between the 34 plants. It is beyond one's imagination to think that something involving price fixing is not happening here. I believe price fixing is taking place.

We talk about farmers with good breeding stock, suckler cows and calves. I agree that rebranding should take place because those cattle are treated the same as some of the calves being bred from a dairy herd. I have a serious issue with this. Some of these breeding dairy herds will never produce beef. It is not possible to produce beef from them. I was a butcher for 35 years and know exactly what I am talking about. I know beef. There is a difference between certain colours of animals one way or another. I see supermarkets using beef and to a certain extent lamb as a market leader within the supermarket. I see round roasts being advertised at certain times at a price I would have been unable to sell them for when I was butchering 20 years ago. Who is paying for that? The farmers are paying for it. It is the same with rump steak, which is cheaper today than it was 20 years ago, and cattle are twice the price so there is a serious problem issue.

Producer groups have been mentioned. I know the Beef Plan Movement has plans for producer groups within counties. I believe that is a good idea. It is done with sheep. Producer groups in my constituency and counties close to me have improved the price they get for their lambs. I do not see anything wrong with farmers doing the same thing for their beef.

Regarding the quality of the suckler herd, the position regarding genomics is crazy. We have the best cattle bred over generations - good suckler cows and calves - and now they will be thrown into the same pot as cattle in the genomics scheme where people are trying to produce beef cattle from a dairy herd. That is very unfair. I know they are talking about lighter cuts and joints but there is a massive difference between a beef animal from a dairy herd and a beef animal from a properly bred suckler herd. This is why we might need rebranding.

Farmers are not surviving on what they are being paid at the moment. If they are not treated fairly and as business people and given a price they can survive on, they will not survive until 2025. We are talking about Food Wise 2025, which is a plan for farming in the future.

The way things are going at the moment they will not survive until 2022. All they want is fair treatment. All they want to do is survive and rear their families on the land. They are being treated very badly by the meat processors.

Chairman

I will ask a few questions before I go back to the witnesses. There is no doubt that there are significant challenges facing the beef sector. There are short-term issues and long-term issues. There are three big challenges in the long term. One is Brexit, which is a serious problem. In the event that things go badly wrong, as we mentioned earlier, the imposition of tariffs would wipe out the beef industry overnight. That is a fact. The second issue is climate change. Regardless of whether we like or agree with it, climate change is a huge issue coming down the line and one which we will have to address.

The other issue, which is also very significant, is CAP reform. This is directly linked to Brexit. When Britain leaves the European Union, there will a hole in the pot of funding which comes to us annually. That will have to be addressed. The Government is committed to doing its bit to address this issue. Some 21 other countries have agreed to row in behind this commitment, but a number of other countries have not yet agreed to do so. There is a body of work to be done in that regard. Unless that happens, we will face serious challenges. Serious issues will have to be addressed when the budget, the multi-annual financial framework, MFF, is being agreed. These will include deciding where to direct funding in order to deal with the biggest issues. There has been much talk about capping, which is a big issue that needs to be addressed. A number of large farmers and organisations receive in excess of €100,000. Some would argue that they should not get that amount or even a lesser figure. That, too, needs to be addressed. Vulnerable areas of the agriculture sector are also an issue. I made the point earlier that it is wrong to pit farmer against farmer. Taking money off one to pay another is a bad road down which to go. We need to be very careful in that regard.

The Chairman's comments summarised some of the big strategic issues. I can say something about those in a few minutes. We have already spoken in different interventions about the four movements, the 30 months and the 70 days. That is what the market is looking for. It is not the case that we are not supplying the market to the specification required. Somebody said earlier, on another subject, that we need to follow what the market is looking for and deliver it. That is what we have to do. We are a cog. We are supplying markets which others are also supplying. These other suppliers are required to do exactly the same as us in terms of meeting market specifications. The answer to the question is that if one does not do that, one's returns will be even worse than they are now.

I will return to the point Deputy Scanlon made. Perhaps I was remiss in not making it earlier. We get it. We understand and hear the heat exploding around the room about returns in the market. We are not immune to that. We have engaged with all of the farm organisations directly on a number of occasions recently. We met representatives of the Beef Plan Movement in recent weeks. We had a discussion on all of the issues we are discussing here. We completely understand the frustration of farmers. Why would we not understand it? We have people working in meat factories and people in this room who have roles at a primary level as well as roles representing the industry view on these matters.

I mentioned that we were at 112% of the EU market price in March and April of this year. That is a reflection of what industry does when returns in the market are strong. The price is now back at slightly below 100% of the EU market price. We are operating in a different environment, one in which the market returns are far poorer than they were in the earlier part of the year. We have never seen the kind of existential crisis presented by Brexit. At the very least, there has been no precedent for it since the connection between BSE and CJD was made in the UK. We were locked out of many markets at that time but we returned from it. All we can do is hope that these returns will come back.

I do not accept that the problem is that processors are treating farmers unfairly. I am saying that they are dealing with the problems we discussed earlier. There is a particular problem in the European market and problems arising from Brexit. When we got close to the point at which Brexit was to be delivered, the market contracted even further. The level of investment and the commitment to purchase were not there. That does not make anybody here feel comfortable. It is not a comfortable place to be sitting when the market is in decline. However, we never sit here when the market is at its height. We never discuss the market when it is performing well. We never meet farm organisations when the market is doing well. It is understandable that we meet them when things are bad. We have to account for that. We try to do that in as reasonable a way as we possibly can.

There are also strict regulations in respect of the process.

Mr. Cormac Healy

Yes, which are applied by the Department. It is important to add that they are deemed restricted and they are not eligible for some markets. There is growth in the area but they are working against eligibility for some markets. There are concerns on that issue. They are being given a feedlot factory title, which would imply that they are all factory owned but that is not the position.

Chairman

I ask Mr. Carroll to continue with his responses.

Mr. Philip Carroll

Deputy Danny Healy-Rae spoke about compliance in the context of climate change and suggested that there is a degree of fabrication regarding that issue. At farm and factory level, the agrifood sector has been meeting the compliance requirements relating to climate change. There are costs associated with doing that work. The reality with regard to climate change is close to hitting home. The Joint Committee on Climate Change's recommendations suggest that there will have to be a serious effort made to meet our targets by 2030. We realise that we have a hell of a lot of work to do in that regard because we are not going to meet the 2020 targets. For me, the question is who will bear the cost of that mitigation because it will be an enormous bill when it comes for somebody in the chain of supply. There are ways in which that will be mitigated in other sectors through subsidies but nobody is mentioning subsidies when it comes to the agrifood sector.

Deputy Scanlon mentioned issues which he said pointed to farmers being treated extremely unfairly. I stated earlier that I am of the view that farmers are having a tough time in the market but that I do not believe they are being treated unfairly by processors. The latter are also having an extremely tough time in the market. Deputy Danny Healy-Rae also stated that farmers took a price reduction at the beginning of Brexit. That is true. There was a 17% devaluation in sterling over a six-week period at that time. That was a direct consequence of Brexit.

I will now respond to the issues raised by the Chairman. We need to know that we have some degree of support from the Government in respect of Brexit mitigation. If we hit those tariff levels, our product will be devalued enormously if we have to go into the UK market and meet a considerably lower market price. All we can do in those circumstances is move product to other higher paying markets but those higher paying markets will become lower paying markets as a direct consequence of Brexit. The European market will be devalued and third-country markets will also be devalued by virtue of our being locked out of the higher priced UK market. We need Commissioner Hogan, the Taoiseach, the Tánaiste and the Minister for Agriculture, Food and the Marine to stand over their promise that they will have the industry's back should there be a hard Brexit. We faced that possibility in March and April and we may well have to face it again in May. We are not out of the woods yet. That is the core message that must go out from this committee.

The second core message relates to climate change. We all know that retrofitting 1.5 million houses will not happen without subsidies. In that regard, the cost per house will be €50,000.

Chairman

It will be €50 billion in total.

Mr. Philip Carroll

It is €50,000 per house apparently. We all also know that there are subsidies available for migration from diesel to electric cars. However, nobody is mentioning subsidies for the agrifood sector. That is a critical point. We agree with all of the farm organisations on the direction of travel as far as CAP is concerned. We are concerned that there are two potential cuts to the CAP budget, namely, a 5% linear cut, which seems to be settled on, and the loss of the €6 billion that will result from the departure of the UK and how that will be made good. The latter will have a cascading effect on other areas, including the support package that might be available in respect of greening, GLAS, BDGP and other schemes. These are all critical schemes.

The Chairman raised a question about market access. I will ask my colleague, Mr. Ryan, to deal with that issue.

Mr. Joe Ryan

I will make a few points because a number of Deputies and Senators have raised the issues of market access and why, in the two years since the Brexit referendum, more has not been done in terms of securing international market access. In the context of Brexit, we have to maintain access into and meet the requirements of existing markets and we have to develop new international markets at the same time. International market access is painfully slow. It is dealt with by competent authorities here dealing with the competent authorities in other countries, namely, the Department of Agriculture, Food and the Marine dealing with similar authorities in the international arena. The competent authority is responsible for trade missions, veterinary protocols, certificates, sampling protocols, multiple plant inspections, reports on those inspections, follow-up actions and so on. We work closely with the Department of Agriculture, Food and the Marine in that regard. Securing access to a third-country market is also down to the willingness and eagerness on the side of that market to facilitate such access because many of them are inundated with other similar access requests.

International market access is key. It is important in finding outlets for various cuts from the carcase and maximising the returns from the carcase. The Deputy mentioned a particular market, and I will come back to him on that.

When we consider our priorities for the beef sector, there is much talk about China. As of today, we have seven plants approved for China. The access that we have for getting beef into China is relatively limited and issues were raised earlier about the requirement for exported animals to be under 30 months. That is a requirement set down by the Chinese. We are talking about frozen and boneless beef and there is a raft of technical requirements that the product must meet, therefore limiting the amount of animals that are ultimately eligible and therefore one of the key priorities is to secure more plant access to the Chinese market. A number of applications are awaiting decision by the Chinese authorities. Let us be clear that the decision is with them and the delay is for no lack of effort on anyone's side over here.

South Korea is another market of interest. The process in that regard is very slow and has probably been ongoing for eight or ten years. We are now at the sixth stage of an eight-stage process. The next stage will involve a parliamentary process in which the South Koreans will debate whether Irish beef should have access to their market. We all know how long parliamentary processes can take.

Vietnam is a key, huge market. It has good potential but, again, progress is very slow. Thailand, Malaysia and Japan are of interest. Japan was mentioned earlier and we have access to it but, like other markets, there are restrictions. There is an under 13 months restriction or limit for Japan at the moment and that is something we are working on closely with the Department. The Japanese authorities were here and we hope to make progress on the age limit.

The other market the Chairman asked about was Iran and technically we do have access to the Iranian market but there are some challenges around the banking of transactions due to sanctions imposed by other countries and there are also technical aspects and challenges about the certificates. The requirement that animals are under 13 months is one of those, and there are others. We are working with the Commission on that because it was a Commission agreed certificate. We hope to address some of those issues to make that market more feasible.

As well as new international markets, there is a list of markets to which we have access but in respect of the potential is limited due to certain restrictions and technical aspects. That is a work in progress. I re-emphasise that access into these international markets is not just a case of deciding to send product into the market tomorrow. It is dealt with at competent authority level and is dependent on the engagement of authorities on the far side.

Mr. Cormac Healy

One retailer was mentioned towards the latter part of the conversation on retail price and maybe it is worth the committee having a look at it. The committee has been looking at Food Wise 2025. Between 2015 and 2018, the consumer price index for food and beverages in Ireland fell by 7.5%. The CSO has those figures. It is worth looking at that because it ties in with what Deputy Scanlon said about pressure in the market.

The industry does not set the price of cuts. Beef is one of the loss leaders in retail. There is serious competition between discounters and other retailers that is putting pressure on the returns achievable, certainly in the context of what the Chairman said about the climate change challenge and the increased costs and challenges facing us. To then face into an environment where there is effectively below-cost selling cannot be tolerated.

I will speak to the myriad questions and comments members posed and made. The industry has published a desired market specification which was asked for by the stakeholders, the Department and Bord Bia. It was published a number of years ago and holds true. We should send it to the committee because it was published. Its aim was to provide guidance on what is required from the market by the vast majority of customers. A point was made about international markets looking for animals that are less than 30 months old and only represent 5%. If I want to send 1 oz or 1 kg of an animal to China, it must be under 30 months. That is the reality. Unfortunately it is not a case where, if an animal is under 30 months, it can go in its entirety to China unlike one that cannot. If 1 oz of a particular animal is being taken, that will be what we are faced with.

I will make a point about Irish beef, marketing, grass-fed animals and various other matters. Efforts are ongoing to explore PGI status for Irish beef. The specific description or designation of that at EU level has to be worked out and the Department is leading that process but it has been engaged with farm organisations, Bord Bia and ourselves. That should be achieved and would provide a designation of what truly makes Irish beef stand out but I do not know if that will apply to suckler herds or not.

I know the point the Deputy is making. I cannot talk about specifics but I referred to the industry's target market specifications on the basis of preferring animals that will meet the requirements of the majority of customers and that, at any given time, will extract the best price from the market. When there is either an increase in supply or a reduction in demand, the animal that meets the maximum number of specifications will be chosen.

That can only be as guidance. Equally, we have said that if a person intends to produce outside of that, he or she should do it in conjunction with a meat plant. They are open to that.

Chairman

I thank Mr. Healy. I now give the Beef Plan Movement ten minutes to respond to the queries.

Mr. Eoin Donnelly

I will first address the queries on targets and sustainability. We need to get to a situation where there is a reasonable apportioning of the value of the product through the supply chain, from the producer to the processor to the retailer and ultimately to the consumer, and we need to have some bandwidth there to reward very productive farmers who are at the top of their game so they make a variance against that standard and do well, while those who are not performing have an adverse variance against the standard. The same goes for the processing plants. If they perform well, they do well, and if they do not, they do not do well. Until we get to that point, the balance of the retail share across the supply chain needs to be targeted. If it is not targeted, the primary producer will continue to get the thin end of the wedge because the price pressure will continue to go down. Meat Industry Ireland has already alluded to the fact today that beef is being used as a loss leader for the retailers. Who ultimately will pay for this? The retailer will pass that cost back to the producer. The producer, with a dominant position, will pass it back to the primary producer. It is inevitable. That is our opinion on sustainability and the targets to 2025.

A very specific question was asked about blockchain. It is easier for me to give an answer to that if I go back to the pharmaceutical industry. Blockchain is the equivalent of serialisation in the pharmaceutical industry where it prevents fraud or counterfeit drugs from being introduced into the market. If one uses what mother nature has given us, which is DNA, in blockchain, then we can effectively do DNA tests. In the horsemeat scandal, for example, DNA tests were shown to prove there was horsemeat in beef packs. Blockchain or a serialisation for beef - a DNA profiling of the beef herd - would prevent counterfeit beef from being introduced. Consider the 7,000 cows that came in from the UK last year that were processed in Irish meat plants. They supposedly would not have a quality assured Irish origin Bord Bia logo, but if we were to be absolutely certain that they were not, we would have to do a DNA test on our trays of meat to indicate the origin of that beef. Using DNA to establish counterfeit beef would give the ultimate traceability. The meat industry in Switzerland does DNA testing en masse of its beef. The Swiss beef market is considerable. I understand that the primary producers are paid well in excess of €5 or €6 per kilo. They eliminate counterfeit beef by using DNA testing, which is the equivalent of blockchain.

I wish to make one point. As the Chairman indicated in respect of Glanbia and Kepak, others have been involved in the dairy element and trying to improve it. I do not dispute the figures that have been mentioned, but it is worthwhile checking some of those efficiency figures with Teagasc. They have been quoted and we should all use them because it would be useful. ABP Food Group limited has been engaged on calf-to-beef and dairy calf-to-beef systems, trying to demonstrate there are good and bad bulls, that is, there are those that can do better in respect of their quality, and Dawn is involved in further efforts on the dairy beef side of the business.

Chairman

Not far from my home, I visited a farm where Teagasc is involved and the figures were impressive in that regard. I forget whether it was last year or the previous year. I am sure those figures can be further improved in future. According to the old saying, if one keeps doing what one has always done, one will always have the same result. We must consider the bigger picture and develop matters differently over the next period. While it may not always be easy, the challenge is there for us all to meet.

The joint committee adjourned at 9.25 p.m. until 3.30 p.m. on Tuesday, 14 May 2019.

Joint Committee on Agriculture, Food and the Marine debate - Tuesday, 16 Apr 2019

Future of the Beef Sector: Discussion (Resumed)

Mr. Patrick Kent

Mr. Edmund Graham

Mr. Edmund Graham

Mr. James Healy

Mr. James Healy

Mr. Patrick Kent

Mr. Eddie Punch

Mr. James Healy

Mr. James Healy

Mr. James Healy

Mr. Edmund Graham

Mr. Edmund Graham

Mr. Edmund Graham

Mr. Patrick Kent

Mr. Patrick Kent

Mr. Eddie Punch

Mr. Patrick Kent

Mr. Patrick Kent

Mr. Edmund Graham

Mr. James Healy

Mr. Derrie Dillon

Mr. James Healy

Mr. James Healy

Mr. Eamon Corley

Mr. Eamon Corley

Mr. Philip Carroll

Mr. Philip Carroll

Mr. Philip Carroll

Mr. Philip Carroll

Mr. Philip Carroll

Mr. Philip Carroll

Mr. Cormac Healy

Mr. Cormac Healy

Mr. Philip Carroll

Mr. Philip Carroll

Mr. Philip Carroll

Mr. Philip Carroll

Mr. Cormac Healy

Mr. Cormac Healy

Mr. Cormac Healy

Mr. Cormac Healy

Mr. Cormac Healy

Mr. Cormac Healy

Mr. Cormac Healy

Mr. Cormac Healy

Mr. Cormac Healy

Mr. Cormac Healy

Mr. Cormac Healy

Mr. Eoin Donnelly

Mr. Eoin Donnelly

Mr. Eoin Donnelly

Mr. Hugh Doyle

Mr. Hugh Doyle

Mr. Hugh Doyle

Mr. Eamon Corley

Mr. Eamon Corley

Mr. Eamon Corley

Mr. Eamon Corley

Joint Committee on Agriculture, Food and the Marine debate -
Tuesday, 16 Apr 2019