Updated: 12/10/16 : 12:16:31
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farming

Weak competition in the beef sector a major concern

IFA President Joe Healy said the serious issues around weak competition in the beef sector, highlighted in the PMCA report commissioned by IFA into the ABP/Slaney deal, have not gone away and must be addressed if livestock farmers are to achieve a sustainable income from their production of top-quality Irish beef.

The IFA President was responding to the decision by DG Competition in Brussels to clear the way for the ABP/Slaney deal.

Joe Healy said farmers cannot understand why the Irish Competition and Consumer Protection Commission (CCPC) refused to investigate the case. He said, “The CCPC turned a blind eye to the serious competition issues in the Irish market for the purchase of cattle.  They effectively washed their hands of the ABP/Slaney deal by leaving it to the Brussels authorities”.

Joe Healy said the conclusion by DG Competition that farmers ‘are able to switch slaughterhouses if they can get better prices’ is totally at odds with the reality of the beef trade, where the weekly quotes to farmers show little or no variation. “It also flies in the face of the main conclusion of the PMCA report, which was that the market for cattle is characterised by weak competition and the ABP/Slaney deal is likely to weaken competition even further, through a ‘substantial lessening of competition’ (SLC)”.

The IFA Livestock Chairman Angus Woods said the reality today is farmers are being forced to sell at a loss-making base price of €3.70/kg, with factories claiming they cannot take stock for another week, at which point the price may be even lower. At the same time, prices for the equivalent beef animals in our main export market in the UK are rising and making £3.64/kg, or €4.30/kg, which is €220 per head more than Irish prices. It’s clear that if we had real competition, farmers would be getting better prices for cattle”.

He said the PMCA report outlines that the chief concern over the proposed transaction is that it would make co-ordinated effects in the relevant markets more likely. “The report is very clear on the competition concerns in the beef sector, the income pressures that exist for livestock producers and the impact that any weakening of competition would have on their livelihoods.”

The report pointed out that ABP and Slaney combined currently account for 25.8% of all cattle slaughterings in the state. When the market is narrowed down to premium cattle of steers and heifers meeting the MII grade and weight specifications, this figure rises to 36.2% of cattle. However, the analysis also shows that when the more narrow relevant market of the South Leinster region is used, ABP and Slaney combined would have 44% of the premium cattle kill.

On sheep meat, the report points out that Slaney/ICM is the largest processor of sheep/lamb meat in the State, with around 40% of the kill.  The report also raised serious competition concerns over vertical integration including rendering and factory feedlot cattle.