"I rise to express my concerns about the beef sector's fortunes, or lack thereof, and future prospects. I will begin by expressing serious reservations about the ESRI statement on the beef sector in Ireland and the image it portrays, as I believe it misses some critical points. To evaluate the merits of supporting the beef and sheep industry purely based on the fact that two thirds of the farms are classed as economically vulnerable is a highly questionable approach. The industry needs support. The ESRI statement completely fails to recognise the value of beef and sheep farms to local economies. They provide primary and secondary income to many families, often subsidising other salaried labour and contributing to the pot to an amount that makes it sustainable for farmers to remain on the land. The farmers invariably spend most of the moneys made in the local economy, supporting a myriad of other SMEs: engineers, fabricators, builders, compounders, fuel suppliers, merchants, co-operatives and so on - the list is endless. Furthermore, they create the pool of citizens in a locality that makes up the numbers for schools, churches, sports clubs and communities. The reservoir of young people growing up in the countryside often elect to return to their localities after education or travel in order to start families, careers and businesses and to settle down and put their roots down in a safe and affordable environment. This is more than an economic appraisal of the profitability of beef and sheep farming.
Agriculture has always been a large-asset, low-margin industry. We are all aware of that, and the Minister, like me, has farming interests.
Unfortunately, as we all know, land and assets do not pay bills, put food on the table, put children through education, or fund the day-to-day expenses a family incurs. It is only because of the resilience and dogged determination of many working in the farming industry that it is surviving at all. Many gave up a long time ago. It is important to note that there is a serious lack of profit throughout the entire red meat industry. As Senator Paul Daly said, we need to consider alternatives to give farmers other revenue streams.
Processing light farming is a high turnover, low margin industry. A large number of businesses are making slim margins of less than 2% on hundreds of millions of euro in turnover. Sometimes we all are guilty of pointing the finger at companies that make millions of euros in profit, but when turnover is taken into account, the margin is slim. A number of significant retailers are making very little on food and sometimes offset losses on food against other parts of their product offering to keep the food offering available for consumers. These should be worrying signs for the entire industry. Quite simply, the supply chain is broken and needs to be fixed. This is all against a backdrop of increasing environmental pressures in the industry, which results in increased costs with no tangible extra return from the marketplace. The bar is getting higher.
In addition, the extra requirements for our animal health and welfare standards, which are some of the highest in the world, are not being rewarded by the marketplace. The industry cannot achieve a price above the market. Irish beef prices currently sit about sixth in the European league table. However, we can demand transparency and mechanisms that could ensure a fair distribution of profits along the supply chain. Everyone in the supply chain is entitled to a living. Credit must be given to those involved in the beef talks because it was a very contentious negotiation process. There is a lot of emotion and passion involved, and it is a credit to those people that an agreement was reached, even though it will never be that all will be satisfied with it.
Furthermore, we need trust in the supply chain because we do not have enough right now. All stakeholders need to ensure efficient, resilient, profitable and sustainable businesses can evolve. A rising tide will lift all boats. Rebuilding trust in the industry will be a slow process.
We need to recognise the role the red meat sector plays in the countryside, which would be a much poorer place without it. Farmers can be uniquely placed as carbon converters, given that there is much work to be done to drive efficient grass-based production in a sustainable and efficient manner. They can be involved in sequestering carbon, focusing on the demands of the consumer and providing high-quality nutritious food, and be truly valued by society for the public good they provide.
Without doubt, the elephant in the room for the industry is Brexit. If we do not get a sensible outcome, the potential damage done could prove terminal for many in the industry. As we know, Mercosur imports have been a contentious issue, but the reality is that they comprise 1.2% of the European beef market and do not currently present a threat, but may do at some stage. If we do not get a resolution in respect of Brexit and beef, we are burning our feet in the fire when the house is potentially burning down around us. Brexit has the potential to do more damage to price and profitability than almost anything else.
It is not all bad news for the industry. Many of us are probably aware of a report this week from academics in Canada that claims that red and processed meat is probably not harmful to our health, and draws into question some of the work carried out by others. Even though the debate on this continues, however, the report supports the theory that red meat, eaten in moderation and as part of a balanced diet, does not present a risk to human health as some would like to suggest. That is one good message for all of those involved in the industry.
These are challenging times and there is no silver bullet to fix the problem. The industry needs to work with processors, retailers, consumers and Government to reach a resolution. Senator Daly's points were well made and there are alternatives that farmers may need to consider to have viable and sustainable businesses."
Sourced from and full discussion available at: