Beef buy-out plan on verge of collapse

By Des Maguire

The beef industry buy-out plan is on the verge of collapse, it was confirmed this week.

It has been hit by the splintering of the Irish Meat Association and by the investigation of the Competition Authority into the latest moves to restructure the industry.

The planned rationalisation is now unlikely to happen.

Several key figures in the industry, including Michael Berkery of the IFA, Ciaran Dolan of the ICMSA and Cormack Healy of the IMA have been interviewed under oath by Terry Calvani, the director of the cartels division of the Competition Authority as part of their investigation which has been ongoing since January.

As revealed in the Journal last year, six meat plants, three large and three small, mostly in the south-east agreed to quit the industry before Christmas.

However because of the Competition Authority's intervention the owners of all six plants have been advised that the buy-out plan has been put on hold and that a question mark now hangs over it.

One of the six plants earmarked for closure is now the subject of new plans for refurbishment and expansion.

The general manager of M.A. Molloy and Sons in Waterford confirmed to the Journal last week that the company had sidelined the rationalisation option because it had slowed and was focused instead on expansion.

The splintering of the Irish Meat Association, with the Goodman, Kepak and Donegal Meats businesses all leaving the association to forge closer links with IBEC also has serious financial implications for the buy-out plan which was being overseen by Enterprise Ireland and the IMA.

Ironically the Competition Authority's probe into the plans to restructure the industry seem to have concentrated more on the original McKinsey and Beef Task Force reports rather than the latest buy-out schemes.

During the recent Partnership Talks several of the farming negotiators including ICOS director general John Tyrrell raised the contradictory and negative roles of the Competition Authority within the food industry.

They pointed out that it was illogical two have two different wings of the State, Enterprise Ireland and the Department of Agriculture on the one hand and the Competition Authority on the other in direct conflict with each other on major policy issues such as rationalisation.

They also fear that intervention by the Competition Authority may delay rationalisation in the dairy industry, a major new study on which is to be officially launched next week.

Anger as factories pull prices

By Paul Mooney

Factories can pay €2.41/kg (86p/lb) for R grade cattle based on current market returns, IFA livestock chairman Derek Deane said yesterday (Wednesday). He was responding to the lowering of prices by several meat plants this week by up to 5c per kg (2p/lb).

Moves by some factory groups to drive down prices below this minimum level of €2.41/kg (86p/lb) were nothing short of an attempt to break their winter beef farmer suppliers and secure a supply of cheap raw material, he claimed.

Market demand in both Britain and on the Continent should improve substantially in the run up to Easter, he predicted. "Bord Bia has launched a major promotional campaign in the top five supermarket groups in the UK this week, which should also boost pre-Easter demand.''

Farmers should not have to carry any of the bonemeal disposal costs from the renderers or factories following the provision of an extra €7.5m in Exchequer subsidy for this service, he said. The funding will deal with disposal up to June 1st next.

He called on the Government to immediately review the regulatory requirements which, he claimed, add unnecessary costs to the disposal of MBM in Ireland. This must include the removal of any prohibition on using MBM as an energy source in electricity generation and cement or glass manufacture, he said.

Following the announcement of the continuation of support for bonemeal disposal the planned withdrawal of cattle supplies from factories was called off.

Minister for Agriculture Joe Walsh announced the additional funding on Friday. The subsidy will apply for a further three months and will be at a reduced rate of €250 tonne. Exchequer involvement will then end, he warned.

It showed the advantage all round of constructive dialogue in addressing difficult issues, he said.

* MEAT and bone meal is being produced to high, feed standards - despite the fact that it then goes for destruction, round table talks involving all sectors of the beef industry heard last week. This meant costs were higher than necessary.

John Gilroy of College Proteins also claimed that the EPA was making it very difficult for cement plants and power stations to get approval to burn meat and bonemeal.

But there was also scepticism of the price increases demanded by renderers. "There is strong prima facia evidence that the level of increase being passed on to us is not justified,'' Pat Brady, representing butchers and abattoirs, claimed. He demanded that renderers back up their demands.