Minster for Agriculture Michael Creed has managed to get both farmers and beef factories back round the negotiating table next Monday.

To use the Minister’s own words ahead of the initial negotiations, “failure is not an option”.

Since talks failed two weeks ago, the sector has been thrown into chaos. Farmers at the gates have been left leaderless, while a combination of financial stress and poorer ground conditions is putting real pressure on farmers to start and move a growing backlog off stock.

Functioning

Given the immediate need to get the sector back functioning, neither the Minister nor the meat processors should turn up to talks on Monday empty-handed.

After five weeks of protest, we know that two of the main asks are the 30-month rule and the four movement limit.

In previous articles, I challenged farmers as to whether or not increasing age limits or the number of movements would actually put money into their pockets.

Profitable

Research points to the fact that the younger animals are slaughtered, the more profitable they are. Meanwhile, it costs around €50/head every time an animal is traded when commission, haulage and loss of performance is factored into the equation.

But it is easy to pontificate from behind a computer and form opinions based on averages.

On the 30-months issue, I have engaged with a number of farmers. Especially in a decoupled environment, there is a cohort of farmers who want to operate a low-cost system almost totally dependent on a grass or a grass silage diet.

It is a legitimate ask for these farmers who are quality assured to seek to have this recognised in the price paid for these animals

For these farmers, a third grazing is essential and therefore average slaughter age is pushed over 30 months due to the national calving pattern. It is a legitimate ask for these farmers who are quality assured to seek to have this recognised in the price paid for these animals.

There are a number of ways this could be delivered.

Separate bonus

The most obvious would be to separate the Quality Assurance (QA) bonus out from the in-spec bonus.

This would see all farmers that have gone to the expense of getting their farms QA receive a bonus when selling prime cattle, regardless of age, conformation, fat score and number of movements.

It could also be extended to include cow beef that is used for top end burger and mince customers. For them, QA is essential but neither age nor carcase grade are.

Split

A separate bonus structure could then be paid for animals that meet processor specifications in relation to conformation, fat score and movement boxes. The split between bonuses paid for quality assurance and animals that meet additional specifications I will leave up to those around the negotiation table.

On the four movements my view remains the same – that the cost of trading animals makes it difficult to justify animals being traded more than four times.

However, in a situation where the bonus payments are split, QA farmers would still receive a bonus in recognition of their QA status, regardless of the number of movements.

There would also be the option to exclude movements that take place when an animal is under six months of age – eg to accommodate young calves that move between the farm of birth and rearing farmers.

Immediate

A proposal to introduce a QA bonus that would be paid on all prime beef plus an additional in-spec bonus is something that meat processors could bring to the table immediately on Monday morning.

Of course, while price cannot be discussed within the meeting, there is no reason why processors cannot also move to reflect the recent strengthening in the beef prices in our main export markets across continental EU.

An analysis by Phelim O’Neill shows a beef price of €4/kg including VAT, predominantly for more efficient young bulls, being paid in our main export markets outside of the UK. Even the Dutch dairy beef market has surpassed Irish prices, indicating scope for some movement on price.

Even the Dutch dairy beef market has surpassed Irish prices, indicating scope for some movement on price

Now let’s turn our attention to what Minister Creed can bring to the table.

In the short term, a commitment to reduce restrictions to allow more farmers enter the BEAM scheme would certainly create a positive tone to the negotiations.

Ultimately, the Minster cannot simply be allowed to attend the meeting as a facilitator. The farmer groups around the table need to ensure the Minister accepts the impact that a dramatic reduction in supports for the suckler and beef sector has had on farm incomes and the ongoing impact of Brexit.

Response

He should bring to the meeting details of how the Government plans to respond.

The one thing that he can do immediately that would signal good faith is commence the legislative process that delivers full transparency beyond the farm gate.

For their part, the factories, as an act of goodwill, should commence the information-sharing process on a voluntary basis pending legislation.

No one entering talks on Monday should do so in the expectation that a solution will be found to all the problems facing the sector over the course of one meeting.

Objectives

The farm organisations should adopt a strategy of short-term and long-term objectives. Should there be a genuine appetite among all parties to reach an agreement, then there are immediate solutions that both the Minster and the meat industry can bring to the table.

At the same time, farmers should not lose the opportunity that has been created to achieve real change in the sector.

A commitment for ongoing engagement must be secured. As detailed on page 2 of the Irish Farmers Journal this week, farmers should demand that the Minster commitments to use the powers of his Department to:

  • Provide farmers with complete transparency in relation to market prices, carcase grading, carcase trim and weekly throughput at each plant – all of this data is already available to his Department.
  • Deliver on a previous commitment to engage an independent body to carry out a complete financial review of margins obtained across the supply chain and the legitimacy of carcase specifications.
  • Explore the potential to introduce a farmer’s charter that processors and retailers seeking to use the Bord Bia Quality Assurance logo would be required to adhere to.
  • Grant an amnesty on stock relief clawback to allow farmers the option not to restock at loss-making prices.
  • Commit to exploring new funding models that will help recover the sharp reduction in support payments to suckler and beef farms over the past 10 years.
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