While meat and dairy processors have welcomed the announcement of a €100m grant fund, farmers will ask should it not have been linked to increased transparency. The grant is available for product and market development with capital grants also available for structural works.
Some farmers may take the view that many of these businesses are privately owned and hugely profitable enterprises not needing taxpayer-funded Government investment. Many also have complex corporate structures through offshore companies, which gives Irish taxpayers little insight into the operation of these businesses and is presumably tax-efficient from the businesses’ perspective. All of this is legal and as long as any business is legally compliant, it has its basic duty discharged.
Opportunity to incentivise
When a business is legally compliant, the Government cannot force it to reveal any more details about its operation. However, it could incentivise businesses to do things beyond legal compliance and this is where the grants announced last week could be deployed. Government agencies such as Enterprise Ireland thoroughly scrutinise the business plan of any company that is looking to access State funding. This is to make sure that they are supporting a viable business that can match Government money and sustain the capital investment without putting the operation of the business at risk.
What could be revealed, however, and not compromise one business over another is the wholesale values for the products of meat factories for the different markets
This means Enterprise Ireland will have access to in-depth detail about a company’s business on what it is selling, where to and for how much. This is commercially sensitive information that will correctly never be divulged.
What could be revealed, however, and not compromise one business over another is the wholesale values for the products of meat factories for the different markets they are sold in. This isn’t so much an issue for the dairy sector as thanks to the Global Dairy Trade (GDT) auctions, values are published every fortnight for the main products in the dairy sector.
South American countries on the values of cuts exported but the best in class is probably the USDA’s reports
There isn’t a similar structure for meat prices in Europe beyond the basic farm-gate prices that are reported and published by the EU on a weekly basis. Good information is published by South American countries on the values of cuts exported but the best in class is probably the USDA’s reports. These provide extremely detailed information published on a daily basis about prices and stocks of meat cuts with a cut-out value representing the carcase. This also extends to offal and hides.
A lack of information on what happens between the farm gate and retail shelf is one of the greatest causes of distrust by farmers in the meat processing sector. Many farmers feel factories don’t give them as much as they should for their cattle and yet when we look at the basic information published we see that Irish beef factories consistently pay as much for cattle as factories in many EU countries do.
Dairy farmers are coming under more intensive rule tightening to continue farming and adhere to policy rules. Any industry grants could be enhanced with insistence on some or all of the following in the terms and conditions; participation in independently assessed milk pricing reviews, collaborative-type processing investments only, renewable energy investments and investments improving dairy product diversification.
This is where there was the opportunity for the Government to get extra value for the €100m grant package. The meat and dairy processing industry has consistently marketed Irish agricultural produce and employed several thousand people to do so. It is a worthwhile and good investment that could have been even better with a few strings attached. The most obvious was to insist on the creation of a transparent structure for value added beyond the farm gate.
Investment by the Irish Government in the meat and dairy industry over recent decades has been well spent money
It is now two decades since a factory relented on publication of individual factory prices in the Irish Farmers Journal. With every factory obliged to contribute, nobody is gaining an advantage and is now just an industry norm. In time value of cuts and offal would become the same and farmers would have a better understanding of why prices were rising or falling.
Investment by the Irish Government in the meat and dairy industry over recent decades has been well spent money.
It has led to value being added to livestock and milk, giving better returns to farmers and creating much needed employment across rural Ireland, usually outside areas attractive to the multinational industries.
The most recent investment is also to be welcomed as it will assist the industry to tackle the challenges of the post-Brexit world.
The Government should go a step further and make the €100m offer conditional on achieving meaningful transparency in the sector.