So, the EU’s competition authority doesn’t see an issue with one company controlling 30% of the cattle kill in Ireland. Should farmers be surprised? After all, it has never questioned this level of control in other parts of the supply chain. Such as the big three supermarkets each controlling about 25% of the grocery market.

Precedence shows that the EU seems more concerned about the price of beef on the plates of its 500m consumers. For example, last year the European Commission approved Dawn Meats’ acquisition of French processor Elivia and earlier this year it approved Danish Crown’s acquisition of SPF in Denmark.

Consolidation is part of the global beef industry. For example JBS bought Swift, Smithfield and Moy Park to become the largest meat company in the world. Last week Kepak announced that it had purchased Kelly’s in Co Clare. And we wait to see what structure Dunbia takes on in the future following the failed merger-takeover with Two Sisters.

Is the challenge for the beef industry and beef farmers really one of further consolidation and less competition, or is it something deeper?

So, is the challenge for the beef industry and beef farmers really one of further consolidation and less competition, or is it something deeper?

For a long time, beef has been a commodity, shipped out from processing plants in boxes and rebranded at supermarkets and restaurants.

Similarly, as today’s consumer wants to know more about where their food comes from, the meat industry has stayed largely out of the spotlight, while staying on the dinner table. This reluctance to be more transparent has made meat processing appear secretive, scary and mysterious to most meat eaters and farmers alike.

Mystery

The beef industry, like sorcery, survives on the illusion of mystery. Operating largely under a veil of secrecy, little is known of the financial performance and even less of its owners.

Profitability of the sector remains unclear. That doesn’t mean it is hugely profitable. This capital-intensive, high-turnover business, is probably only a 1% to 2% margin business at best.

While average production costs are known inside the farm gate, little is known about what costs lie outside the factory gate.

These are businesses that remain private, yet it is very unlikely, through a web of complex structures, that there is any unlimited consequences for their owners if all goes wrong.

How the Government (either EU or Irish) has allowed a sector of critical importance to the agricultural economy of Ireland, representing over 40% of gross agricultural output, legally hide behind a four-page set of annual accounts to the companies’ office every year is incredible in this age of transparency. In many cases these are companies with more than €1bn in sales.

In contrast, Tesco, which controls almost a quarter (22%) of the Irish grocery market, communicates quarterly and discloses accounts, margins and profits.

Earlier this year, the French government proposed legislation that would increase fines for processors hiding financial results. The legislation would force processors to publish accounts, or face fines of up to 2% of sales for non-compliance.

No transparency from beef forum

The beef forum was to be a platform for communication yet it has failed to deliver meaningful transparency in either the production or marketing process beyond the farm gate. It has become a stage on which the various players perform and move on without any real engagement.

Transparency aside, what this deal does for ABP is augment its dominant position in Ireland and Europe. ABP now becomes interesting to an international buyer. However, inevitably all family businesses are faced at some stage with what succession looks like. And the time will come for ABP to consider this also.

Options include it remaining in family ownership, or an international buyer making a bid. In a post-Brexit environment, does ABP become even more attractive?

What would such a move mean for Ireland’s beef industry? Has ABP grown large enough to fend off international competition, or has its growth just made it more attractive to an international buyer?

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