In last week’s Irish Farmers Journal, we revealed how two of the world’s largest dairy companies – Danone and Nestlé – had taken steps to conceal the financial performance of their businesses here in Ireland using the mechanisms available to them under Irish corporate law.

While both companies are doing nothing illegal, it is frustrating for farmers to see large multinationals making moves to hide the profitability of their Irish operations, particularly when farmgate milk prices are so dependent on these buyers of Irish dairy ingredients.

This week, we take a closer look at the financial transparency, or lack thereof, within the Irish meat processing industry. It has long been a bone of contention between farmers and factories that there is no visibility into the financial performance of a sector that is critical to the Irish rural economy.

Financial secrecy has bred deep mistrust between farmers and the beef processing sector. Of the 10 beef processors in Ireland – be they large entities like ABP, Dawn and Kepak, or smaller independent processors like Jennings Ballinrobe and Moyvalley Meats – only one company publishes detailed financial accounts (see Table 1).

Insight

This processor is Foyle Meats in Co Donegal, whose annual profit and loss account provides farmers with the only insight into the profitability or otherwise of the beef processing sector in Ireland.

Unfortunately, Foyle Donegal accounts for less than 5% of the cattle kill in Ireland, meaning there is no financial transparency for the companies slaughtering over 95% of Irish cattle.

For 2017, Foyle Donegal recorded sales of almost €102m for the year, which was up 10% on the previous year. However, the accounts show the business made a pre-tax loss of €1.1m in 2017, which is an improvement on the €2.6m pre-tax loss recorded by the business the previous year.

Despite these hefty losses, Foyle Donegal’s business is secure in that it is part of the larger Foyle Food Group, which has operations in Northern Ireland and Great Britain and made profits of £4m in 2017.

Foyle Donegal’s commitment to financial transparency must be commended. Although Foyle Donegal has an unlimited corporate structure similar to almost every other beef company in Ireland, the company consistently publishes detailed financial accounts.

Many private companies claim that revealing profit levels and margins in their business will give competitors an unfair advantage and see them lose business.

Yet for 2018, Foyle Donegal was the leading beef processor in the Irish Farmers Journal beef factory price leagues (see p18) paying the highest beef price in the country across five categories and the second-highest beef price for a further three categories of cattle.

The company has a range of blue chip customers such as McDonald’s and Tesco, and is in the process of building a new burger manufacturing plant to meet growing demand.

In contrast, the three largest beef processors in Ireland – ABP, Dawn and Kepak – have only continued to draw an ever darker veil of secrecy around their operations. For example, since Larry Goodman’s ABP acquired a 50% stake in Slaney Foods in Co Wexford, the company has transitioned to become an unlimited company like its new joint owner and is no longer required to file accounts.

Prior to ABP coming on board, Slaney had consistently filed detailed financial accounts for its business performance. The last accounts filed show the Slaney business had annual sales of more than €240m in 2015, while profit margins were slender at between 1% and 2%.

All these accounts have since been pulled from the Companies Registration Office office (CRO) and Slaney’s business has become just as opaque as that of the wider ABP group because it is unlimited.

Similarly, Dawn Meats has made moves to conceal the financial performance of Dunbia since it acquired the business in 2017. Dunbia was another meat company that consistently published financial accounts for both its operations in Ireland and Northern Ireland.

In the closing months of 2018, directors in Dawn Meats filed documents with the CRO to strike off the Dunbia Ireland business from the Register of Companies, which would negate any requirement for this business to file accounts. However, this application is currently being held up due to a legal dispute with a former employee of Dunbia Ireland.

Secrecy

Overall, the trend in the Irish beef industry is one of secrecy at all costs, where divulging profitability is simply not even up for discussion.

The annual accounts filed by Foyle Donegal are a total outlier to the workings of the wider beef industry. Unfortunately, the consolidation we have seen in the beef industry over recent years has only resulted in even more secrecy, which in turn deepens mistrust between farmers and processors.