Back in July, MPs on the Environment, Food and Rural Affairs (EFRA) committee at Westminster received evidence from farming representatives as part of an on-going inquiry into beef grading.

Last week it was the turn of beef processors, with a delegation that included Jim Dobson the managing director of Dunbia and Tom Kirwan, the managing director of ABP in the UK.

The inquiry was prompted by changes to penalties and deductions for “out-of-spec” cattle, an issue in NI in 2014, but a more recent concern in Britain after some factories enforced new pricing grids in late 2015.

A recent analysis by the AHDB (Agriculture and Horticulture Development Board) has suggested that the new tighter penalties (for example on overweight cattle) could be costing finishers in Britain around £1m per month.

However, muddying the issue for MPs on the committee has been the recent introduction of Video Imaging Analysis (VIA), grading in various meat plants in Britain.

“Out-of-spec” penalties

Grading cattle is a statutory requirement under EU law and is the basis used to pay for cattle. It has nothing to do with penalties on “out-of-spec” animals, a point missed by some on the committee.

“The week before we put in the VIA grading £1,095 was the average cost of my animals. The week during installation it was £1,097, and the week after it was £1,100,” said Tom Kirwan, as he defended the new system.

While all the major factories in NI have moved to VIA grading, that is not the case in Britain, where the majority (including Dunbia) still use manual graders.

“We did not put in the VIA, as we reckon there is going to be more technology (measuring yield of cuts), which will be even better than what the VIA machine is, in a very short period of time,” explained Jim Dobson.

Lack of trust

During the evidence session the Dunbia chief was quizzed across a number of issues. When asked about the perceived lack of trust between farmers and processors he argued that the evidence suggests otherwise.

“I cannot understand where the trust issue is. We buy loads of cattle every week, and they take our cheques. They must trust something,” he said.

Both he and Tom Kirwan rejected the suggestion that a cartel exists in pricing, pointing out that if one factory puts the price of beef up, others simply react to avoid losing cattle to a competitor. Both also denied that farmers were not given sufficient warning about new penalties and deductions, especially around weight penalties.

“The market has been told for three, four or five years that cattle over 420kg are not where the consumer demand is,” said Kirwan. “Everybody got plenty of notice. We have told them about four moves for years and that heavy cattle did not suit us,” added Dobson.

Why Dunbia has not signed up

He also clarified why Dunbia has not signed up to a voluntary code in Britain drawn up by the National Farmers Union and the British Meat Processors Association.

That code requires processors to give 12 weeks of notice for any changes to be made in terms and conditions with suppliers. “My reason for not signing was I believed that the code of practice should be for the whole chain (farmers, processors and retailers) and not just for us,” he said.

The point made by both Dobson and Kirwan is that they react to trends in the market, one of the latest being greater maturation, enhanced packaging and fixed weights when selling steaks.

Using fixed weights has meant that the raw material has to be more consistent, said Kirwan.

At one end of the business, steaks from heavy cattle over 420kg do not fit into pack sizes, while at the other end plainer type cattle lack the depth and consistency to fall into premium steak ranges.

With demand for British beef strong, Kirwan suggested that the UK might only be 65% self-sufficient in steak cuts, and across all beef ranges only 75% self-sufficient.

It means that the prices paid to British farmers are among the highest in the world he said.

Young bulls could be hit next

Earlier this year, Tesco announced that it would be phasing out young bulls from its Tesco Brand beef products by the end of 2016.

The British supermarket will continue to use young bulls in mince, burgers and its Boswell Farm ranges, but it is still a significant change to buying policy.

Giving evidence to the EFRA committee at Westminster last week, Tim Smith from Tesco failed to give a clear justification for the change, although it is understood to be related to the desire from the retailer to provide a consistent product to consumers.

However, with a number of major retailers stating that they don’t want young bulls it is creating a problem for processors.

“We are telling all our farmers that our customers do not want young bulls, but people still keep producing young bulls. Someday it is going to happen once again, where young bulls are going to be in the same situation as overweight cattle,” suggested Dunbia chief Jim Dobson.

British or Irish for Boswell Farm

Tim Smith from Tesco was also questioned about the source of the beef used in their fictional brands, such as Boswell Farms.

“Our customers make little distinction between British and Irish beef, and all our fresh beef is British and Irish.

“Seventy percent of it is British, 30% is Irish, and the label on the front of the pack makes it very clear,” insisted Smith.

He also denied that the brand is in any way misleading to consumers. “Our customers are savvy. They do not expect this to be a literal representation of a single farm,” he said.

Northern Ireland MPs missed opportunity

At the EFRA committee meeting with producer representatives in July, the chief executive of the National Beef Association, Chris Mallon, raised concerns about the differential in beef prices paid to NI farmers compared to their counterparts in Britain.

Despite it being an important issue for farmers here, neither of the two NI MPs on the EFRA questioned the senior representatives from processing or retail on the reasons for the differential. It was an opportunity missed by Upper Bann MP David Simpson and South Down MP Margaret Ritchie.