IFA and beef processors preparing for a showdown

Why the farmers and the meat processors can't be friends is explained by Seán MacConnell, Agriculture Correspondent

Why the farmers and the meat processors can't be friends is explained by Seán MacConnell, Agriculture Correspondent. On the basis that history keeps repeating itself, it is likely that the real action will break out this week

In boxing terms, what has been happening between the Irish Farmers Association and the Irish Meat Association over the last five weeks could best be described as a rematch in which no heavy blows have yet landed.

But that is likely to change this week with the escalation of the dispute to three-day protests mid-week, which are bound to impact on the distribution of beef from the factories.

The last dispute between both sides closed down the industry completely for three weeks in early 2000. That dispute - led by Tom Parlon, then the farmers' leader and now a PD Minister of State - was in pursuit of a claim by the farmers for a price of 90p a lb for their cattle.

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Then, as now, the beef factories maintained the marketplace would not justify paying that much but in the interests of peace, and under strong pressure from the Department of Agriculture, Food and Rural Development, a settlement was reached.

It was a bruising and ugly dispute by any standards resulting in no clear winner. The IFA had to cough up £750,000 in court fines and legal costs, the factories lost customers overseas and - as usual - the consumer gained nothing either.

The IFA, under the threat of the courts and the Competition Authority, opted for localised negotiations with the factories on prices and an upturn in the market delivered those for a time.

There were promises of transparency (the buzz word in 2000) and co-operation. The Department of Agriculture published weekly cattle prices and a three-man committee under the chairmanship of former civil servant Kevin Bonner was set up to examine the problems.

The industry had just recovered from that dispute when it was plunged into another crisis, this time not one of its own making because it involved the outbreak of BSE on the Continent.

Beef consumption dropped dramatically and there was no outlet for the animals coming on to the market in January 2001. Egypt and Indonesia, two of our biggest third-country outlets, shut their doors to Irish beef.

Once again, Ireland's beef industry was rescued by the European Commission, which put in place a slaughter-for-destruction scheme. It involved prime Irish beef being slaughtered and destroyed by being sprayed with a purple dye at a price of 90p a lb and an outlay of £200 million by the Irish taxpayer.

The public forgot about the beef industry through much of 2001 as we were gripped by the drama of the foot-and-mouth crisis, which ran late into last year.

The slaughter of so many animals in Britain because of the disease created a huge demand for Irish beef.

In the past year beef exports to Britain have doubled but, unfortunately for Irish farmers, three-quarters of the exports are going into the highly competitive wholesale market rather than to the higher-priced retail trade.

The recovery of beef consumption in Europe, improved demand from Russia and the technical reopening of the Egyptian market with a promise of increased export refunds has brought the IFA men back protesting again in a demand for higher prices for their cattle.

The original demand from the IFA, now under new leadership, has been for a price of €2.52/kg (90p/lb) but with prices now in the region of €2.30/kg (85p/lb), there appears to be a realisation that this is not achievable.

Over the past month, the IFA has been placing pickets at weekends on the meat factories. Initially, these ran for 24 hours and the factories rearranged their production schedules.

Staff worked overtime at the plants before the IFA banners blossomed in the car-parks on Sunday evenings and the staff signed on the dole until the IFA went away.

Both sides were content to castigate each other in print in highly expensive newspaper advertisements. Production was disrupted but the plants were able to organise themselves around that.

With no one willing to mediate between the two sides, the dispute is escalating dangerously as distribution of beef to the lucrative British retail market is bound to be hit.

The factories have increased their pressure on the IFA by telling farmers they will not be killing animals this week and this will mean a build-up of animals on farms where grass is no longer available for feed.

It is difficult to know where the truth lies between the two conflicting sides. Can the factories pay more for cattle? Are the farmers getting enough for their product?

Nothing put forward in its defence by the Irish Meat Association on the difficulties the factories face in the international markets has been contradicted by food board An Bord Bia or the Department of Agriculture.

Irish beef is being sold into a hostile environment even in the EU, where competition from Union rivals and South American product is forcing the wholesale price down.

The IMA can point to the Bonner report issued after the last dispute, which found no evidence of a price cartel in the meat companies and said factories were operating on a profit margin of 1.1 per cent, which the IMA now claims has been eroded because of the worsening trading conditions.

The factories ask, not without justification, where the €540 per animal paid in subsidies to farmers to compensate them for low prices is going.

On the other hand, the IFA is asking why Irish cattle prices are so low compared to the rest of the EU, where prices are and have been traditionally 20 per cent higher.

The farmers here ask why the doubling of exports to Britain, where local producers are being paid €2.81/kg (£1/lb), is not delivering more benefit to them.

The removal of BSE restrictions on six Irish counties by Russia, they argue, and the 30 per cent increase in export refunds for Egypt, should make a cattle price increase more than possible.

Even at this stage, there is a sense that both sides want to get out of the boxing ring before real damage is inflicted.

However, on the basis that history keeps repeating itself, it is likely that the real action will break out this week.