The Irish Beef Sector Agreement was signed on 15 September 2019. After months of unrest at factory gates, then Minister for Agriculture Michael Creed convened the group to try to resolve differences through dialogue rather than protests. The agreement had two strands:
Progress to date
An in-spec bonus rate of 12c/kg payable for steers and heifers under 30 months grading an O- with a fat score of 4+ has been introduced. A bonus rate of 8c/kg was introduced for steers and heifers aged 30 to 36 months and an increase from 12c to 20c for the standard in-spec bonus rate. The in-spec 70-day residency period was reduced to 60 days on the last farm.
Bord Bia has also developed a cattle price index, a beef market index and an offal price indicator. The Teagasc scientific review of the Quality Payment Grid determined that the subclass differential rate of 5.6c/kg (rounded to 6c/kg) has moved to 6.86c/kg based on prices in the 2017/2018 year. Fat score price differential has moved from -5.1c/kg to -6.09c/kg. A Protected Geographical Indication (PGI) application has been submitted after consultation with the beef taskforce group.
Grant Thornton was commissioned to produce three reports – an independent review of market and customer requirements, an independent examination of the price composition of the total value of the animal along the supply chain and a summary of competition law issues relevant to the Irish beef sector. The purpose of the market review and customer requirement report was to analyse if the current in-spec criteria are required to meet current market demands and the market access and other benefits to meeting this criteria.
Who sits on the Beef Market Taskforce?
The taskforce is made of a number of representatives from the main farm organisations, State bodies and the Department of Agriculture. The group is chaired by Michael Dowling, a former secretary general at the Department of Agriculture. The group has met six times since it was set up, the latest meeting taking place virtually before Christmas.
While the Beef Market Taskforce has made some progress in relation to bonus payments on stock, the progress has been small and very slow.
We can blame Brexit, Covid-19, China or anything you want, but the bottom line is that beef price hasn’t improved since the taskforce was set up.
A draft report titled “A Review of Market and Customer Requirements” rubber-stamps the market requirements for under-30-month beef and quality assurance. While the 30-month limit was brought in as a result of BSE, the age limit could become a marketing tool in the future as the slaughtering of younger animals is being associated with environmental benefits.
Forty-seven per cent of the value of Irish beef exports were exported to the EU, accounting for 40% of volume
Farmers are likely to question the value for beef farmers in the production of the three reports and what changes they will bring to the industry. In 2019, 43% of the value of Irish beef exports went to the UK, accounting for 46% of exports by volume.
Forty-seven per cent of the value of Irish beef exports were exported to the EU, accounting for 40% of volume, so the requirements for these markets are most important.
Some see it as a movement, while others see it as a residency
The four-residencies rule and 30-month age limit came in for severe criticism from farm organisations at the height of the 2019 factory protests and the report strengthens the argument for the age limit but lacks details on specific customer requirements. It is less conclusive on the four-residencies rule.
There seems to be some confusion among customers as to what this actually means. Some see it as a movement, while others see it as a residency. It was generally accepted that some customers required it, some saw it as preferred, while a third cohort did not require it.
The report contains an interesting third-country market analysis. It highlights recent successes on gaining access to countries such as the Philippines, Iran, Singapore and Egypt.
The report states that 10% of the value of Irish beef exports went to third countries, accounting for 14% of the volume.
The authors of the report looked at the age requirements on the veterinary health certificates of 34 of these countries. It indicated that 67% of markets required under-30-month beef, while 33% of countries reviewed accepted product varying between 48 and 72 months provided an officially approved BSE test was carried out. Stringent specification criteria are used by processors as a market differentiation tool and strong rivalry within the European market in particular could see the introduction of more stringent rules.
A whole-life model is mentioned in the report, something that will concern farmers as some may see this as another hoop to jump through with finished cattle while processors will see it as another tool to market Irish beef.
At the outset, the report highlights that consumers are increasingly looking for more transparency about how the food they eat is produced.
The other test has been in the beef price
Farmers have laid everything on the table and opened the gates to enable full transparency on the supply chain.
But this stops at the factory gates, and this report does little to shed any more light on what happens behind those gates.
The other test has been in the beef price, and while some will argue that it’s too early to see the benefits of any work completed by the taskforce, beef price hasn’t increased since it was set up.
The biggest slip up that the taskforce has made so far is allowing the €100m beef fund for dairy processors and meat factories be paid without any conditions.
Farmers are reeling from a nitrogen reduction condition attached to the BEAM fund while a small number of privately owned beef factories have access to the same fund of €100m with no conditions attached.
It could be a case of short-term pain for long-term gain, but say that to a winter finisher who needs €4.40/kg to breakeven taking a €3.80/kg base price this week. Is it working? Make your own mind up.