Tuesday, 15 October 2019

Questions (60)

Richard Boyd Barrett

Question:

60. Deputy Richard Boyd Barrett asked the Minister for Agriculture, Food and the Marine the status of discussions with the beef industry regarding the creation of a base price for beef; and if he will make a statement on the matter. [41990/19]

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Oral answers (8 contributions) (Question to Agriculture)

I listened to the earlier discussion on the plight of beef farmers and the responses of the Government on the matter. I am not an expert in this area but I have spoken at length to farmers and members of the Beef Plan Movement. According to the Central Statistics Office, there was €2.8 billion in the beef sector in 2018, but the vast-----

There was €2.8 billion in the Irish beef processing sector.

Yes. The vast majority of farmers are not getting those profits - they would not be protesting if they were - so the profits must be going elsewhere. Is the Minister considering how the profits being made could be redistributed in favour of the farmers?

As the Deputy will be aware, neither I nor my Department may legally have any role in determining a price for beef or any other commodity. He will be aware, however, that a series of formal negotiations took place between beef sector stakeholders, beginning in early August and culminating in the agreement reached on Sunday, 15 September, the text of which is available on my Department's website. The agreement involves a number of interventions that will provide immediate benefit for beef producers as well as a range of strategic measures that seek to address structural imbalances in the sector. Beef producers will benefit from an immediate increase in a range of bonuses. This will increase the level of bonus being paid on certain animals as well as significantly increasing the number of animals that are eligible for a bonus. The cumulative effect is that over 70% of steers and heifers slaughtered will be eligible for a bonus on top of the base price paid. A number of actions in the areas of market transparency, beef promotion and strengthening the position of the farmer in the supply chain are included in the agreement. These measures set a course towards greater clarity for all stakeholders involved in the beef supply chain, primarily farmers.

My Department is proactively engaging with several potential beef producer organisations, which have the potential to strengthen the bargaining power of beef farmers in the supply chain. A constant refrain, of which I am sure Members are aware, is that farmers are price takers. Beef producer organisations enable farmers to work collaboratively together, control supply of a significant volume of beef and, from that position of strength, negotiate with processors on the basis of an agreed price and sharing some of the risk involved in rearing cattle over a prolonged period. Two beef producer organisations have been formally recognised by my Department in recent weeks.

A beef market task force has been established to provide the leadership to develop a sustainable pathway for the future of the beef sector in terms of economic, environmental and social sustainability. The task force will provide a robust implementation structure for commitments entered into in the agreement, with timelines and stakeholder engagement. Furthermore, it will offer a suitable platform for strategic engagement with key stakeholders, including retailers and regulatory authorities. It is chaired by Michael Dowling. It was scheduled to meet yesterday but the meeting was adjourned because members of the task force were prevented from attending it. It is in the interests of everyone involved in the beef industry that the work of the task force goes ahead. Its remit is to monitor the implementation of the actions arising from the agreement reached on 15 September and it offers the most viable platform for strategic engagement with key stakeholders. It was a great pity that farm representatives were not in a position to air the legitimate concerns of farmers at the task force.

The plight of beef farmers has come centre stage as a result of protests and people power. I commend the Beef Plan Movement and farmers on their protests, which have forced this issue to the top of the agenda and engendered some of the progress that now seems to be taking place. I qualify my remarks by pointing out that I am not an expert on this issue. We know that certain people, such as Larry Goodman - I do not mind mentioning names; we know who they are - dominate this sector.

One of the points made to me by farmers is that in Canada and possibly also the United States, those who own processing plants may not also own feedlots and rendering plants. A person may not control all parts of the chain because that would allow him or her to dominate and control the market and have small farmers over a barrel. The farmers suggest that a simple measure that could provide a big part of the answer would be for the Minister to signal that he is willing to introduce legislation similar to that in Canada such that the dominance of the big players cannot persist and they cannot control all parts of the chain.

I appreciate the point made by the Deputy and acknowledge that the supply chain is complex. The task force is empowered to consider best practice, legal frameworks, etc., among other matters. The Deputy's point on ruling out ownership of certain enterprises by processors is an interesting one. Although I have not taken formal legal advice on it, I suspect it may not be legally possible to state that one may not own a particular enterprise here. The task force is in a position to consider the issue of feedlot ownership. However, feedlots controlled by beef processors do not control the overwhelming majority of cattle that are slaughtered. To some extent, it depends on what one defines as significant. The definition of "feedlot" also deserves consideration. Some feedlots are owned by farmers who trade independently. It is an area in which we must maintain constant vigilance.

As the task force will comprise representatives of all stakeholders, it is a very welcome development that can look at all of these issues and build trust and understanding on issues about which there has been too much mystique, such as what is happening in the marketplace or who is getting what in the market. It may build a relationship, therefore, between both sectors, particularly primary producers and processors. The current relationship cannot continue as it is a recipe for a faltering industry in the future.

Nobody wants to see angry scenes. Farmers are not out protesting for the good of their health. Rather, they are doing so because their income levels are not sustainable. It is very provocative for C&D Foods and Mr. Goodman and so on to have injunctions hanging over farmers if they are serious about building trust and engagement. The Government should clearly state that the injunctions and threats of legal action against farmers fighting for their livelihood should be lifted. I urge the Minister to look seriously at the issue because what we are talking about is a financial connection between the processors who dominate the market and the feedlots that essentially allow them to put goods onto the market and, as such, depress the price. It is a little similar to how OPEC operates in the Gulf states. If one producer threatens to raise the price, another turns on the taps to keep the price down. The people who lose out in this case are the small farmers, whose incomes are pitiful, although people such as Mr. Goodman are making very significant profits.

The interventions by the State should not be and have not been about interfering in terms of establishing a base price. Rather, they have been about supporting incomes, as has been the case under the Common Agricultural Policy for many years. These measures include the basic payment that every farmer receives as well as other supports such as the areas of natural constraint payment - 70% of the country is classified as ANC disadvantaged lands - or specific programmes under the rural development programme for beef farmers, for suckler farmers and organics. More recent initiatives have seen targeted interventions to respond to the income crisis, including a €100 million fund for beef exceptional aid measures and the beef environmental efficiency programme. There is an extra €120 million available this year for schemes specifically targeted to support incomes.

The consequences of previous support for product prices were butter mountains, wine lakes and so on. We have moved away from that and towards supporting incomes for farmers when the market does not function adequately, as is clearly currently the case.