Dáil statement on Current Issues in the Beef Sector
September 17th 2019
I thought I was in Rip van Winkle land for a while. I am the longest serving current member of the Oireachtas agriculture committee – I went on it in 1993, a long time ago. I remember when I protested strongly against the cartel movement and certain individuals taking over particular industries and consolidating them. I was nearly trampled by farmers for opposing those things – I was being a communist, I suppose. Many who spoke today would be people who opposed the views I articulated at that time and which I still hold. When we create monopolies and cartels, the victims are the people at the lowest rung of the ladder. Monopolies and cartels exercise muscle, power and monopoly, and they give people what they like and that is what people have to take.
The last thing we should do in the Dáil is contribute to any misinformation or to mislead the farming public into thinking that certain objectives are achievable which may not be so and in effect advocate for the legitimate expectations which can arise from over-promising and from false hope. I know this because I stood on the picket lines with many farmers and, indeed, I did a lot more work behind the scenes, helping out certain organisations – that is all I will say about that at this point. My advice has always been very straight and strict.
At the end of the day, this will come down to price. Cool heads need to prevail on all sides. We need to reflect carefully on the agreement that has been reached in the past number of days. Some people have doubts as to the bona fides and the trust that one can invest in the processors and there is understandable anxiety that they would ever honour anything. However, insofar as we can take people at some degree of trust, I think this heralds an opportunity for a new beginning to secure the necessary improvements in farm incomes from beef enterprise. A significant amount of progress was made and a significant number of the objectives that were set out by the various organisations involved, some of which I was advising, have been achieved, which must be acknowledged. I and my Labour Party colleagues have certainly listened carefully to what the President said this evening, namely, this is the first step. The oak tree did not grow overnight: the acorn seed is there and from there significant progress can be fleshed out. Although I do not go around the press looking for any kudos, I have done a lot of work behind the scenes and I have many contacts. I believe a small increase in the base price, along with the other achievements, would bring everybody around to accepting that this is the first step. I hope this can be achieved in a peaceful and logical fashion.
Agreements, by their very nature, are predicated on compromise, which eventually means that none of the parties achieves what they set out as their objectives or goals at the beginning. Farmers are justifiably frustrated about the low price of beef compared to the price of production and the desperate income situation that prevails on so many farms, which would be worse only for the single farm payment system. Partial decoupling came in during 2001 and then full decoupling happened in 2005 and decoupled payments from output. Those have become devalued in terms of purchasing power, which is another issue. The single farm payment was brought in to complement price, which we should not forget, and that was said at the time by the Commissioner. I was there: I was listening carefully to all of this and I took it in.
There has been a perfect storm brewing in agriculture. I did a study in 1983, when there were 420,000 suckler cows. In 2013, there were 1.17 million suckler cows. I warned about the consequences of this and there was cacophony of sound of delight from everybody and every party in this House except myself. I warned about Harvest 2020 and about the 2025 targets for cattle. When the abolition of milk quotas took place, I warned about what would happen. What did happen? There were 290,000 extra milk cows. And 290,000 calves. That is the story. Then, we had people bellowing and roaring that they wanted us to provide subsidies for so they could export calves, the very same crowd who were buying calves down the south for €2 or €4.
They then wanted a subsidy and extra lairage. Imagine having the neck to come into a committee and ask for that. I know of many rural shops that are closing, and they do not ask for subsidies. They employ many people but did not get many subsidies or much sympathy from anybody here. Let us be clear about a few things. How dare anybody come looking for subsidies. They are getting calves for nothing and then they want somebody to subsidise them to go abroad.
This is a perfect storm. Just look at what is happening regarding the CAP payment. We will lose €12 billion when the UK exits. Apart from Brexit, there are other factors. There is a €12 billion hole that has to be filled. That will be for single farm payments. Ireland has indicated, through the Taoiseach and the Minister, that we will play our part, but other countries, the four big ones, are resisting. There is not a word of capitulation from them yet, that they will help fill in the deficit, and that will mean further trouble. Then we have the Mercosur deal hanging there. There are the climate change issues as well as the supermarket retailers. We had better be careful here. I keep telling every farmer – I spoke at a fairly big meeting a few weeks ago – that out of every ten cattle produced, nine must be exported and only one is eaten at home. That includes the Pat McDonaghs and the seven big retailers, the multiples. That is all that is eaten at home. I want to go after the retailers and get them in here, but they refuse. In 2010 I was Chairman of the Committee on Enterprise, Trade and Employment. They refused to come before the committee to explain themselves. The processors, Mr. Goodman, ABP, Dawn Meats and all the others, are private unlimited companies, so we do not know what they are doing or how much money they are making. It is the same with the retailers, the big multiples, so nobody knows. That is the big problem and the reason Jim Power has done a study and thinks it is 40% to 45%, the difference between the take from them – the primary producer, the retailer and the processor. The processor says the farmer is getting 65%. The primary producer, the farmer, says he is only getting 20%. Nobody knows anything. It is all guesstimate work, and when we get that transparency and a price regulator in place, then we will know. We have been calling for that for many years, but it is probably not that easy. Do not tell me about the Competition and Consumer Protection Commission. If there is a little business somewhere, it will find some method of ensuring that it drags it before the appropriate courts.
There are currency fluctuations, falling demand and changing consumer preferences. They are all there, whether we like it or not. Veganism is becoming a big issue. As somebody who likes a bit of beef and eats it anytime I get it, I was surprised when a 62 year old man told me the other day he does not touch beef anymore. I said to myself—–
This man is not a Taoiseach or anybody like that; he is a professional man. He says he does not touch it. That is part of the issue. We have to recognise that. We cannot be blind to what is happening. That is what is going on. Sometimes in here we try to set out what is happening out there and are told, “Oh, that does not happen at all.” Some of us here try to invent reality, but I face reality, I am pragmatic and I try to get solutions. If we solve this thing tomorrow, I ask colleagues not to be fooled. They will have to deal with it, but I ask them not to be fooled. In 12, 24 or 36 months, they will be back again because a fundamental restructuring of this industry has to take place, and that is the problem. Sticking-plaster solutions are grand, they get one over the hole, but that is no good because long term, this will implode. I have always held that view of this industry. It is a €3 billion industry. We have falling prices. We are talking €3.50 or €3.60. If a farmer got the €3.60 and could get the various things that are promised, premiums and incentives and the like, we would get close to €4, but anybody going out of here tonight and pretending that €4 is achievable this evening or tomorrow is grossly misleading and telling lies to people.
That is absolutely wrong. I have another profession but I trained as an agricultural economist with the late Professor Sheehy, and the one thing he always told us as economists was to tell the truth and the statistics don’t lie, and I am telling the truth to people from experience and knowledge. We carried out those studies 40 years ago, so let us be clear. Beef production output in the EU has gone up by 2%. It is now 102% self-sufficient. Here we are exporting nine out of ten animals to an area that is 102% self-sufficient. That is why we have to get to the Chinese and all those other markets. Some of them are not as profitable as others. I heard somebody giving out about Bord Bia. I always saluted Bord Bia because I knew some of the people in there. Aidan Cotter has retired from it now. He was a person who was deeply committed to getting the best for Irish agriculture and the beef and sheep sector and he did an excellent job. I know he has gone on to something else now and I wish him well.
All these things have created a problem, so the current situation is just a manifestation of long-term problems that did not come up overnight. There is no mushroom thing in this. This has been welling up for the past 25 years.
And more, and it bedevils this important sector. I keep warning my own brother about the suckler cow. For the last ten years, I have been warning him to be careful but the reason most farmers continue is that they have an inherent love for what they do in an open-air setting and he is happy, like so many others working on their farms. For beef farmers, €4,791 was the average income in 2018, and 125% of their farm income is made up of the single farm payment. The average single farm payment in the country is about €13,000-odd. Of course, too many lords and ladies are getting this subsidy, including some of the major beef processors, which is seeking injunctions against people. It goes back again to my time as a young man, green behind the ears. I objected to that. I am on the record many years ago saying there should be no place for subsidies for corporate farmers or anything of that nature. They should get nothing. I was proposing capping it 20 years ago and people said, “Oh, sure, that fella comes from the Labour Party and they are communists.” That included some farmers and farm organisations, and it was farm organisations that did not have the guts to come along and say what they thought. Why should farmers from the west of Ireland only get about €5,000 or €4,000 in subsidies, if they are lucky, and some very rich well-to-dos with 250 or more acres get €105,000, €110,000 or €120,000? It does not make sense.
Subsidies were brought in to sustain the maximum number of farm families on the land, not to ensure that ranchers and corporate farmers are sustained, so until we tackle that, we will be back here articulating and mouthing the same thing, and I will watch from the sidelines, saying, “Good God almighty, it is like Rip Van Winkle stuff again.” So let us be honest with one another. That is the place to start.
Dairy is profitable and in 2018 the average income was €43,000. I agree with Deputy Kenny that Irish beef is produced to the highest environmental, welfare and traceability standards. With green grass production, everything is great and there is traceability from the farm gate to the fork. We have all that but all those issues will not go away, and I did talk about the abolition of the milk quotas. I think the Minister may well remember that. I advocate that he deal with some of the issues. Red meat clearly has an important role in a balanced diet, and that must be emphasised and not lost sight of.
As producers of a commodity, beef farmers are effectively price takers. We have approximately 70,000 beef farmers and approximately 1.8 million cattle processed by 35 processing plants in a year.
This is a recurring flashpoint. I hope we resolve it tomorrow. I plead with farmers to reflect carefully and not to be misled. Teagasc has set out a figure of €4. That is the objective. That objective will not be achieved in a flash. It could be attained with a combination of things that are integral to the agreement that was reached last Sunday. We all know that operating at a loss is not a long-term strategy. What worries me, as I have said to people on the picket lines, is that looming over the current adverse situation is the shadow of Brexit. We could see the implementation of World Trade Organization rules. That would mean we would be uncompetitive in our largest market, with the UK market taking 50% of our beef exports. We will not be talking about €4 but wondering if we will get to €3. Let us be clear that is what would happen.
Can producer groups help? This critical mass of farmers banding together would facilitate negotiations with the processors. A number of them have been in operation. I know the Minister has given the go-ahead lately. Everyone needs to know that when one is in a producer group, one cannot go running around. People have to band together. Getting three quarters of a cent extra somewhere else should not make one leave the pitch. People have to stick with their producer group. I have met farmers who ran away when this sort of thing arose. Farmers should stick with producer groups. I see fixed price contracts as a better way forward. As it is now, the farmer takes all the risk. If a farmer has a fixed price contract, he or she knows what he or she will get. Irrespective of currency devaluation, fluctuations or market conditions, the farmer knows what he or she will get and that is safe and secure. Farmers have to work towards that. It would involve sharing the risk between processors and producers or farmers. That is to reassure farmers and give them confidence.
We have to think outside the box. The day of just bringing the animal to the mart, getting dinner in the middle of the day and going home, like we all did, and socialising, which is an important part of the mart, is diminished unless we change things through those new strategies. We have an opportunity. Given the importance of farming to the rural economy and our traditional way of life, the job of Government is to assist farmers who have been struggling for years. The Minister has to talk to the EU. He has the €100 million to distribute now. Young farmers under 35, who are well qualified, and started to build up a farm three or four years ago, are being asked to take a 5% reduction. That is a nonsense. We have to have a situation where they can continue and to ensure that they are protected and not subject to reductions. They are only getting on their feet. It is important that condition is applied and that exemption is available for them, otherwise we are setting off on a fool’s errand. We have to have a sustainable future for farm workers.
It would be remiss of me, as we discussed today in our Parliamentary Labour Party meeting, not to mention that a group which is largely forgotten with the current situation is the workers. Some 6,000 workers have been laid off, including some in my own constituency. Three rang me recently who are being laid off. They are worried about the uncertainty that they face. They have nothing to feed their children, to pay mortgages or to pay for cars. That is significant. It is low-paid, precarious work. Meat Industry Ireland initially refused to negotiate with the farmers. In fairness to the Minister, he got it to the point of negotiating. It also refused to engage with the trade unions representing workers. The workers were told they could apply for social welfare payments when they were laid off. SIPTU told me that many workers in meat plants have come from abroad on specific work permits and are not allowed to apply for social welfare or to go for other jobs. Meat plants are a source of employment in many rural areas where few other jobs are available. In planning for a sustainable future for the beef industry in Ireland, provision of alternative jobs for meat factory workers must be a central consideration if, as seems likely, the beef processing industry will shrink. That is my position.