Beef price volatility
Michael Fitzmaurice highlights sharp beef price changes and says farmers are not seeing fair returns despite stable European market conditions. The Tánaiste acknowledges serious concern, points to Brexit, Covid-19 and market volatility, and says transparency work and plans for a food ombudsman are continuing.
If the Tánaiste or I go to buy a car today and visit three different garages that sell the same car new, we will get a different price. If he looks at the television night after night, each of the different stores that sell food will be able to tell him how much he saves.
Funnily enough, however, it has been brought to my attention by individual farmers that, in January of this year, the beef price was €4 per kilo. In February, all of a sudden it dropped to €3.70 while the markets in Europe did not show a deterioration.
In fairness to the Irish Farmers' Journal, every week it has printed prices publicly, be they from the likes of Kepak, ABP Food Group, Meadow Meats, Charleville or Liffey Meats. Sixteen different factories, to name but a few, are printed in terms of price every week. Funnily enough, however, the same price is there for each and every one of them. As they say in rural Ireland, there is not a breadth of a hair between them, ironically enough, even though meat is going to different parts and different contracts, be it in Ireland or Europe. Drilling down into this very good information, especially around 7 February 2021, it shows heifers were quoted at €3.75 and cows at €2.90. Drilling down more, it is seen that in certain parts of the country, especially in the south, one factory ended up on the price of €4.48. A person does not have to be a mathematician to take out all the bonuses and see that the price would have to be around €4 to €4.10. Ironically enough, however, it has been stated to me from information I received that beef feedlots are what brought in a large amount of cattle that week. It appears, and I am saying it appears, that a small farmer will get one price but a person on a contract or who is a big operator will get a second price.
This needs to be investigated. The Government needs to do something about this. From talking to the Competition and Consumer Protection Commission, all it will say is that it is concerned about the consumer. The farmer is the person who produces the goods, however. At the moment, the farmer is a price-taker. In 2019, the Minister, Deputy McConalogue, stated that it needed a full investigation. We need to bring in a regulator with teeth but also with powers to go in and take the computers and data. We are not accusing anybody of anything. What we are hearing on the ground, however, which generally is not too far wrong, is that something is amiss with what is going on in the beef sector. Will the Tánaiste work with the other parties to do this for the sake of agriculture and of the farmers?
Comment on this
I thank Deputy Fitzmaurice for raising this important issue. I know the price of beef and volatility of beef prices is causing enormous concern for farmers and rural communities throughout Ireland. The Government is aware that recent price volatility in the beef sector is causing huge difficulties. We are conscious that the sector is especially exposed due to factors such as Brexit and Covid-19 given its resilience and reliance on international trade and the food service and hospitality markets.
As the Deputy will be aware, prices for beef and other commodities are commercial matters which the Government has no role in fixing.
The Minister for Agriculture, Food and the Marine, Deputy McConalogue, and his Department are working to ensure that businesses and services to farmers can continue, keeping food and other processing facilities operational, as well as ensuring that payments and commercial activities necessary to protect farm incomes continue. The Department is also working to ensure Irish beef has access to as many high value markets around the world as possible. The Minister, Deputy McConalogue, and the Minister of State, Deputy Heydon, are today having virtual meetings with customers in China, the Netherlands and the United Kingdom.
The nature of all markets is that prices will fluctuate, especially in the case of a market disturbance. That has been evidenced during the Covid crisis and also the uncertainty surrounding Brexit. The Government provides a range of financial aids to help beef farm incomes, as well as to support economic and environmental efficiency. These include the €300 million beef data and genomics programme. In addition to this, over the past two years more than €200 million was made available specifically to the beef sector, including the beef exceptional aid measure, BEAM, and beef environmental efficiency pilot, BEEP, schemes in 2019, along with the beef finisher payment and the beef environmental efficiency programme sucklers, BEEP-S, in 2020. In budget 2021, €85 million was allocated for specific supports for sustainable beef farming. This included more than €40 million for the extension of the beef data genomics programme during the transition period before the next Common Agricultural Policy. The beef sector efficiency pilot, with an allocation of €40 million, and the €5 million dairy beef measure were launched last week. Considerable financial supports are going from the Government to beef farmers and, to a lesser extent, dairy farmers.
The Minister has also secured €6 million in the budget for promotion of the suckler beef brand abroad. He continues to progress work around protected geographic indication status for Irish grass-fed beef. As trade Minister, I am working on that with him. We hope to extend this on an all-island basis in time.
Bord Bia's beef market tracker includes a comparison of the prime Irish beef composite price with a comparative export benchmark price based on weighted average of our key export markets. The tracker was put in place as a result of the work of the beef market task force and provides an additional measure of transparency for beef prices which is critically important.
Comment on this
I am not questioning the different schemes the Government has. I never mentioned them. I agree with the Tánaiste that prices fluctuate. Funnily enough, however, sterling was 91 pence to the euro and it then went back to 85 pence. That means it is better for the person buying in England. The difference between an animal in Ireland and an animal killed in England was €200. Today, if one brought what are called cull cows to mart where the same agents would be buying for the factories, one will actually get more per kilo in the mart. They are still bringing them into the factory at the price the farmer was supposed to take.
Does the Tánaiste agree that it is rather unusual that there would not be as much as a cent between him and I, if I were a factory owner, right across the board in 16 different factories? It is as if someone has a magic wand over all of this. Is the Tánaiste prepared to introduce a regulator with teeth to look at what is going on in the beef sector?
Comment on this
The task force commissioned Grant Thornton to conduct a series of market transparency studies. At the most recent meeting of the task force in March, there was an update from Grant Thornton on its work. The Minister, Deputy McConalogue, attended the meeting where he expressed his concern with the manner in which factories informed farmers of recent price cuts, along with changes to breed bonuses and weight limits.
The programme for Government commits to the establishment of a national food ombudsman. This is ongoing and requires the drafting of a statutory instrument to transpose the unfair trading practices, UTP, directive before the deadline of May 2021. Legislation will then be required to establish the new office of the national food ombudsman, NFO. It is intended there will be a national consultation process on the functions of this new ombudsman prior to the primary legislation being enacted. The Minister is also considering how to include price transparency and reporting issues as part of its functions.
The short answer to the Deputy's question is "Yes". We are committed to establishing a national food ombudsman. Legislation will be required. That legislation can set out the powers and functions the new officer will have. I know the Deputy will want to engage with us on that.