Brian Meredith, on behalf of the Talamh Beo Operational Group, takes a hard look at the alarming consolidation occurring within the Irish beef industry that belies our reputation for grass-based, nature-friendly farming.
Irish beef has a rich history of grass-fed animals on multi-generational family farms with farmers who believe in a natural and simple approach.
To paraphrase some prominent marketing “cattle are only taken off pasture in the harsher winter months for welfare reasons”. Seems straightforward. However, when you look a little closer, it doesn’t actually say “grass-finished” and claims only that animals are raised on family farms. In fact, two recent statistics call into question the integrity of the above claims and whether this image of Irish beef farming heritage will indeed be consigned to history itself.
Statistic One – 26% of the cattle killed in the first six months of 2023 came from feedlots. Statistic Two – There has been a 58% increase in cattle killed from feedlots between 2017 (263,000 cattle) and 2022 (416,500 cattle).
As a beef farmer, this represents a disturbing proportion of the supply of finished cattle and an alarming concentration and consolidation within the industry. This creeping trend of larger, confinement-based finishing units comes at the detriment of animal welfare and erodes the selling power of farmers, as factories have greater control of the cattle supply. Beef farming contributes many positives, both ecologically and socially, in Ireland. It supports incomes on smaller farms and helps to build soil organic matter and recycle nutrients while converting large areas of inedible forage into nutritious human food. Beef cattle have a beneficial effect on biodiversity in grasslands and maintain open habitats for many wild birds, insects and other creatures. No doubt, beef’s higher carbon footprint is an issue that must also be weighed up in the balance. However, these benefits are associated with cattle at pasture on smaller-scale farms and it is these that are lost in a move towards a more consolidated production system. Feedlot systems are in stark contrast to grass-based finishing on smaller farms, an image that is heavily leaned upon when marketing Irish beef. Is the future of beef processing to retain the family farming marketing image while in reality sourcing the majority of animals from feedlots? As farmers, we are constantly told that our competitive advantage is to increase the amount of grass in an animal’s diet so why are we progressively moving away from farming in line with our natural ecology towards large-scale feedlot units?
Another worrying pattern that has emerged in recent years is the accumulation of buying power with the larger meat processors absorbing smaller ones. Here is a selection of examples from the last two years. ABP has tightened its grip on the industry through its acquisition of Slaney Foods, a large formerly-independent processor, while also increasing its footing in the UK through the buying of Scotbeef. Dawn has an offer accepted to buy Kildare Chilling, pending a green light from competition authorities, in addition to its absorption of Dunbia in 2020. Kepak has taken control of processors like John Kelly Meats in Clare and 2 Sisters in the UK. However, all these mergers need approval from the relevant competition authorities which are there to protect the industry, right? Well, in all but the pending Kildare Chilling case, the competition authorities have approved the acquisitions citing that they do not significantly affect competition in the state. It is possible that this questionable assertion may be true in certain individual cases. However, when viewed as part of a larger pattern of consolidation, each merger removes one more option for farmers looking to get the best price for their cattle and results in a gradual ratcheting up of buying power for the bigger processors.
Supply Chain Capture
Viewed from afar and with the passage of time, the consolidation of the beef industry has been occurring gradually and insidiously throughout the supply chain. Initially, at a consumer level, supermarkets have killed off the competition from local butchers and shops. The emergence of these major supermarket chains has provided the opportunity for larger and larger beef processors to leverage their scale to remove many of the smaller processors. Now it appears that processors are not just happy with consolidating the processing industry but are looking to concentrate and control the supply of cattle through the increasing number killed from feedlots. A further element of this producer consolidation is the emergence of integration models rolled out by processors where farmers are tied into specified production systems with prescribed suppliers and inputs. Is this the future we want for the beef industry? One where the blackhole of supermarkets and large processors eats up all the margin and control along the supply chain? A model of concentration of power, money and animals into tighter and tighter circles?
A Farmer’s View
The consolidation of the processors selling large volumes in supermarkets with tight specifications has a noticeable effect on the farm. For example, payment is based on a narrow window of conformation grades, fat scores and carcass weight limits. So, as a farmer, if I can deliver animals to specification then I am paid accordingly. However, my experience is that these specifications and weight limits are effectively ignored in times of short supply and conversely tightened in times of greater supply. This can mean very different prices for what is essentially the same type of animal. As smaller producers, we are constantly told to ‘sell hard’ when dealing with the factories. But what does this mean in a landscape of increasingly larger-scale feedlot finishers dealing with fewer and larger processors? The bargaining power to ‘sell hard’ just isn’t there and is undermined to some extent by the guarantee of supplies from these feedlots. So what protections are there for the smaller producer? What opportunities for change are there in the beef sector?
One counter to the buying power of the large processors is the creation of farmer cooperatives and producer groups. These groups could coordinate the sourcing and transport of cattle from many farms while also providing a degree of selling power to its members. A cooperative would have some chance of negotiating forward prices for its members’ cattle rather than the unrealistic idea of farmers ‘selling hard’ with small numbers at the time of sale. This is not a radical idea, there are already many examples of successful cooperatives in Irish agriculture including dairy processing and livestock marts. Indeed, there are already some successful producer groups for certain beef breeds (Angus and Hereford) achieving bonuses for their members’ cattle in Ireland.
“A cooperative would have some chance of negotiating forward prices for its members’ cattle rather than the unrealistic idea of farmers ‘selling hard’ with small numbers at the time of sale.”
Another measure that could help address the power mismatch in the beef industry is the introduction of an Agri-Food Regulator by the government. If properly financed and backed, this new position could help to bring more transparency through the implementation of the new EU Unfair Trading Practices directive. For example, a properly equipped regulator could look at issues like the current price disparity between Ireland and Northern Ireland. Certain types of cattle are selling at up to 64 cents per kilo less than a similar grade animal in the North. Considering the similarity in farming production systems, cattle type and markets served, this is surely a glaring difference that prompts further investigation and justification. A strong regulator could at least hold the industry to account and ensure transparency and justification regarding prices paid to farmers. Another positive step in this regard would be a ban on selling below the cost of production and linking prices to input costs. A law to this effect already exists in Spain and similar measures have been debated in the Dail. Effective implementation of this could provide greater protections to producers when selling to increasingly consolidated processors. However, does this appetite to regulate large businesses exist in Ireland? Is the consolidated processing industry too big to be regulated?
There is an opportunity for realising a more diverse, less-consolidated beef processing industry by holding onto our remaining independent processors and preventing any further accumulation of power. Existing mergers and takeovers have been addressed by state and EU competition authorities and given the green light. While each of the individual buyouts may not shift the market competition significantly they do further strengthen the hand of the larger processors. It is analogous to saying a small hole in a boat won’t make it sink but if you allow enough holes . . . The responsibility for this falls on us and our representatives in government and the EU to provide more protections and limits on larger processors. The EU Directorate General of Competition to date has given approval to many of these mergers in the beef industry but can we honestly say it doesn’t adversely affect competition? Is it credible to say the acquisition of Slaney Meats hasn’t limited competition in the surrounding area? Will there be a report saying that the absorption of Kildare Chilling into Dawn Meats has no effect on outlets available to farmers? There may well be, but as a farmer, the logic of fewer processors setting more competitive and fair prices is not clear to me. Perhaps collaboration between any new regulator and competition authorities can take a broader view and see the pattern of increasing monopolisation of processing facilities.
A further headwind to the smaller-scale processors is the current supermarket-dominated food system which has developed in Ireland. In this highly competitive market, price and scale are extremely important. Only the largest of the processors can provide a national supply for supermarket chains. There are many changes which could help level the playing field. The most obvious is returning to buying our meat from a local butcher whereby a closer relationship between producer and processor could exist with more money staying in the area. A further improvement could be a commitment by supermarkets to stock local meat in a similar way to how some already do with horticultural produce. In addition, the government could provide a consistent market to smaller processors by establishing a priority for local food procurement in state bodies and organisations. This could give preference to local smaller-scale producers while being a good news story for the state and the health of the people who work in these organisations.
These are some of the positive steps that could lead to a more equal, just and sustainable beef industry. An industry that provides a fair living to beef farmers who take the responsibility of producing beef in a sustainable way, carry the associated risks and put the welfare and care of their animals to the fore. To recap, these steps include:
Collective farmer action through cooperatives/producers groups
Strong regulation ensuring fairness and transparency
Stricter competition criteria applying to mergers/takeovers
Supporting smaller-scale processors and retailers through local food procurement policies
Clearly, there is a need to address the alarming consolidation occurring within the beef industry both at the processor and producer levels. Ireland has a ‘green’ reputation of grass-based, nature-friendly production methods, an image which should be retained and be a reflection of the production systems actually used instead of window dressing to a feedlot-based system.
Have your say – join the conversation
Talamh Beo would love to open up this conversation and get your views on the issues you’ve encountered. We are organising an online meeting for our members to have an open discussion on the issues within meat production and processing in Ireland, as well as the role of animal husbandry in an agri-ecological context (details to be confirmed in the coming weeks). If you would be interested in contributing to this discussion or wider farming issues, please contact us at email@example.com. We look forward to hearing from you.