DEAR EDITOR,
Your editorial on 7 November rightly expresses concern about falling weanling prices, the disruption to the Algerian export trade and the millions of euro tied up in credit through marts. However, it appears to present the closure of the Algerian market as the main explanation for the recent pressure on prices, without properly examining whether excessive credit had already distorted the trade.
The central question is not simply why exporters stepped back when Algeria closed. It is whether prices had been driven to unsustainable levels by a large volume of mart credit that should never have been available on that scale.
If purchasers were enabled to buy stock using substantial unsecured or inadequately controlled credit, then bidding power may have been inflated beyond genuine market demand. In that circumstance, high prices would not be a reliable measure of a strong export market; they would be partly the product of artificial finance.
The editorial notes that top quality 300-400kg bull weanlings are back approximately €1/kg, or €350/head, compared with last year. It also acknowledges that the PSRA cautioned marts about providing credit for stock purchases and that millions are now at stake. Those statements raise a more fundamental issue than the editorial addresses: whether mounting credit exposure was already creating a fragile market, with the Algerian closure merely exposing that weakness.
Credit has a role in normal mart business, but it must be controlled, properly secured and operated in full compliance with PSRA client-account requirements. It should not be allowed to inflate purchasing capacity to the point where prices no longer reflect buyers’ real ability to pay, the underlying export demand or the value of the animal.
Farmers deserve a clear account of what has happened. They need to know whether the high trade was supported by genuine, funded demand or by credit lines that left marts and vendors exposed once exporters withdrew. They also need assurance that money due to sellers is protected and that client funds have not been put at risk by credit arrangements.
The Algerian closure has undoubtedly added pressure, and protecting live export markets remains vital. But it should not be used to obscure the underlying question of how such large credit exposure developed in the first place. If excessive credit helped inflate prices, then the recent fall is not solely a consequence of Algeria closing; it is also the unwinding of a market distorted by credit.
A truthful examination of the problem must address both the loss of an export outlet and the financial practices that may have amplified the rise in prices and intensified the subsequent fall and should be called out for what it is we are witnessing.
