In an editorial last April, we highlighted the need for the Department of Agriculture and Teagasc to inform the debate on the future of the Common Agricultural Policy (CAP) with the facts. We called for both organisations to carry out and make public a detailed analysis on the shift that has taken place in support payments between sectors over the past 10 years.
In the absence of this information being provided, the Irish Farmers Journal analysed recent data from Teagasc which compared profit monitor data for the top third of suckler and drystock farms (based on profit per hectare) over the 10-year period from 2008-2017, with 2017 being the most recent year for which profit monitor data is available.
The figures show that in 2008, the top third of suckler farms received the equivalent of €1.01 in support payments for every kilo of liveweight sold off the farm. By 2017, the figure had reduced to just 57c/kg – a drop of 43%. In the case of a farmer selling weanlings averaging 330/kg, this represents a drop in support payments equivalent to €145 per head.
The extent to which supports have been slashed on non-breeding beef farms is even more stark. In 2008, the top third of farmers selling beef animals received the equivalent of €1.17 in supports for every kilo of liveweight sold off their farm. In deadweight terms, this equates to a support payment equivalent to €2.25/kg.
By 2017, the figure had collapsed by 65% with farmers receiving just €0.41 in support payments for every kilo of liveweight sold off the farm or €0.78 per kilo of deadweight. This equates to a reduction in support for the top third of beef farmers equivalent to almost €1.50/kg deadweight or over €450 on a typical finished animal.
Some will argue that the reduction in support payments is not a surprise and reflects policy at EU level to move away from providing direct market supports to farmers under CAP. While that may be the case, it does not take from the need to highlight the extent to which this policy is crippling the financial viability of Irish beef farms.
Of course, the flaw in EU policy is the belief that the market will respond to the reduction in direct payments and therefore underpin farm incomes.
At a Teagasc/IFA beef event in Kilkenny on Tuesday night, farmers were told that at the current support levels, a beef price of €4.72/kg is required for the average farmer to make a profit of €200 per suckler cow. Yet the market is currently returning a base price to farmers of €3.45/kg, just 30-35c/kg more than in 2008 when supports payments were the equivalent of €1.50/kg higher than at present.
Financial despair
Against this backdrop, it is little wonder there is such a level of financial despair among suckler and beef farmers. What we are seeing playing out at the factory gates reflects not just the collapse in market prices but also the extent to which vital support payments have been eroded without any significant increase in market prices.
Therefore, when the question is asked as to what solutions can be offered to farmers protesting at factory gates, a commitment on price transparency and carcase specifications alone is not enough. A commitment to addressing the sharp decline in the level of support payments targeted at the sector must also take centre stage.
Yes, some farmers will reject the notion of additional support payments and instead place all hope on higher beef prices. However, those who present a view that it is possible to secure the €1.50/kg lost in support payments through higher beef prices are guilty of misleading farmers with a populist agenda – it is the same populist agenda that has seen farmers marched to the gates of the meat factories and then abandoned.
Yes, the Beef Plan Movement brought the financial crisis facing farmers to national attention and exposed the way in which beef processors and retailers were treating farmers. But many of these farmers now feel deserted by a leadership that clearly had no strategy in place and, as such, have thrown the sector into chaos.
It is not acceptable that individual farmers have been dragged through the courts while those that created the situation stood back. It is important that the vacuum created by the Beef Plan leadership being absent is not filled by those looking to advance an agenda beyond highlighting the challenges in the beef sector – farmers should not be used as political pawns.
Time for leaders to stand up
It is time now for all farmer leaders to stand up and stand together. The commitment and resolve shown by protesting farmers has highlighted the severity of the financial challenges within the sector and the extent to which it has been ignored by others. However, a resolution is not going to be found at the factory gates nor by dragging farmers through the courts.
Minister for Agriculture Michael Creed needs to use the power of his Department to create an environment that allows farmers to stand down. But we should avoid rushing into another round of late-night crisis meetings. These will only end up delivering more sticking plaster solutions that are popular rather than dealing with the real problem.
Instead, the minister should be proactive in bringing structured proposals and commitments to the table that can be developed in conjunction with farmers and processors over a period of time.
These should include an initial commitment by the minister to use the powers of his Department to:
All of the above could be catered for through the development of a charter of farmers’ rights to which processors and retailers would sign up. While it may be difficult to force them to sign up to such a charter, the use of the farmer-owned Bord Bia logo or Origin Green could be conditional on doing so. Why should it be just farmers who are required to meet conditions in relation to the Bord Bia Quality Assurance scheme?
Of course, the key deliverable over which the minister has most control is a commitment to target direct supports back to the sector. While he has repeatedly rejected calls for a €200 per cow payment, it is no longer tenable for the minister to ignore the financial hardship that a combination of poor prices and lack of supports is causing at farm level.
The reality is that if national policy is to maintain a suckler herd, then it must be supported. Alternatively, if policy is to wind down the herd, then Government should be up front with farmers – the current policy of simply allowing the sector wither on the vine has created the level of desperation that has seen farmers take to the gates.
Minister Creed has two strands from which he can draw: the most immediate being delivery of an emergency crisis fund that the Government and European Commission have promised will be available to protect farm incomes from a no-deal Brexit. There is a strong case for these funds to be made available immediately.
Longer term, if the political decision is to maintain the suckler herd, then an entirely new funding stream and model will be required. Securing a commitment from the minister that protecting the beef sector will be of strategic national importance and that it will be adequately supported alongside the establishment of a farmers’ charter that will place additional commitments – including price transparency – on processors and retailers, would represent real delivery.