The Northern Ireland Assembly - Report Restoring Profit for the Beef Producer

Mr Moore: In the long term, our industry has done more than any other in Europe to try and hold up standards in pricing.

Mr Dallat: I am sure that the last thing that we need is bad blood — excuse the very bad pun — in any element of agriculture. That is not in the interest of farmers facing debts of £800 million. I took the opportunity to clarify that there was no evidence of a cartel, so I am not guilty of that. In relation to my failure to visit a meat plant, I would say that I have received any information I needed from your organisation by telephone. Although I have never gone in person to see cows being killed, I am happy with the information that your organisation gave me. Let us now begin to operate in the interests of those who matter most ¾ the farmers with their back against the wall.

I found your document most interesting and well worth discussion. I have a particular interest in co-ops because I have been a member of the Credit Union for 30 years. I have seen how that organization has had a positive impact on the lives of thousands of people across Ireland, many of whom are farmers. The concept of co-operatives should not be dismissed and this has not been done in Question 4(b). The Committee does not dispute the main facts that you provide, but the picture is different for the other main meat production supply chain.

The poultry industry may have its problems but the supply chain is not one of them. Would it be fair to say that poultry processors have invested heavily in setting up a stable and responsive supply chain that has stood them in good stead? I am not suggesting that a five week production cycle in controlled conditions should be applied to beef animals, but, the involvement of the processing sectors is necessary to create an effective co-operative producer supply chain. Is the Northern Ireland Meat Exporters Association enthusiastic about creating a modern supply chain or are you set against it?

Mr Moore: I am happy to respond to your question, as I am a representative of what is possibly the last co-operative meat plant in Europe, which says something about the success of co-ops. However, I am not saying no to co-operative involvement in the industry. There has been no clear direction or strategy on co-operative involvement in meat processing across the three species.

Unfortunately, we are frequently given examples of successes of co-operatives involving white meats and pig meat. The subsidy environment in those industries is entirely different. Poultry, in particular, is a free market commodity inside and outside Europe. This has allowed people to enter into contracts because they have been in control of most of the factors which bore down on the contract. The life cycle of the animal is also an important factor.

The association has no aversion to the development of a supply chain relationship. However, primary producers must play a large part in the thought process and creativity involved in developing it. In meetings held throughout the country, we did not receive any substantial ideas to bring to the table. If we contract forward from birth to beef, how can the producer make an assessment of the market environment he is moving into, or of subsidies?

In the past three years, there have been substantial changes in the architecture of subsidy provision, including the way a farmer receives his subsidies. The debate over area aid payment continues in Brussels. We are open to debate, but we are experts in meat processing, rather than in supply chain relationships of that length. Nevertheless, we would be very happy to bring to the table other ideas.

Mr Dallat: If the Department of Agriculture and Rural Development were to accept this idea as a serious possibility, would you be a willing participant in the development of a suitable concept?

Mr Duffy: Supply chain management has been discussed, particularly, in the sub-groups of the vision group. They have been exploring ways to tighten the chain and improve communication between the links. There has been a long-term focus on trying to educate producers about where the best returns are and also the quality demanded by the market place. Meat plants have done a lot of work, through partnerships with suppliers, but that is not a national effort, it is a local one. The situation can change overnight depending on the market, or the decisions taken in Brussels, which can be frustrating.

Mr McHugh: We have certainly listened with interest to your robust defence of your position and, of course, you are entitled to do that. We have a number of questions that we need to ask on the debt situation, but there is not really time to answer all the questions posed. You said that there had been allegations and that we should visit your meat plant. I have been to meat plants before and I am not sure that I would get that much out of it by going again. I would welcome a visit to a plant, but we would probably find it difficult to fit another meeting of any description in. However, we will try to do that, if it helps to clarify the situation.

We need clarification of the relationship between yourselves and the other vital part of the industry — the primary producer. The Minister has set out her view that if farmers organised themselves to any great extent, processors would go elsewhere — for example, Brazil — to source the product. That option is open to processors and meat plant operators. If the price gets too high locally, they could move to where it is lower. We have only limited time to come to any conclusions beyond just grasping the simple questions.

In question eight, you eloquently set out the realities of fluctuating supplies. Is that not an equally eloquent argument for investment in fixing the supply chain to make it meet market needs — that includes all of what we have said about why farmers have not, as yet, fully integrated with the quality from their end?

The Deputy Chairperson: Could I ask members of the Committee to keep their answers short? I have three more people to get in and I want them all to get a question in.

Mr Tweedie: I think that the question is totally wrong. As far as we are concerned, 95% of farmers, while they are not happy with their return, find that their relationship with the industry has never been better — contrary to what the member says. We have 3,500 members in our producers club. Every week, 20 to 30 farmers visit our factory. We take them through our costing from start to finish; we have farm visits; we teach them how to rear cattle; and we offer farmers beef contract systems. The relationship has never been better. That does not mean that income is good, but only a minority says that there is conflict between the industries. I would like to say that the member is totally wrong; 95% of farmers have good relationships with their plants. I want to make that clear. As far as we are concerned, there is no antagonism. We have concerns — big concerns — but not antagonism.

As far as the supply chain is concerned, I must point out that, in 1996, our market was cut off completely. In five years, we marketed 350,000 cattle into the major supermarkets in the United Kingdom. We did this in two ways. First, we invested in packaging meat to specification. We are committed to using Northern Ireland and British meat for the British supermarkets. Two years ago, when the ban was partially lifted in the United Kingdom and the database scheme allowed the United Kingdom to shift a small amount of beef into Europe, beef from the Republic of Ireland was prevented from going into Britain and our percentage of market share rose by 16%. In essence, while there was a meat export ban, there was also a protected market, because we were able to go into the United Kingdom. It has been proven by the Republic of Ireland that the United Kingdom is the best market in Europe and the North of Ireland farmer has been enjoying the benefits of that market for five years.

The real crux is not the relationship between the farmer and the processor — it is Government policy sterling is so strong. Seven or eight years ago, the pound sterling was worth IR£0·90, now it is worth IR£1·30. These conditions are beyond our control. The Government are allowing import meat in, the pound is too strong and the situation is beyond the processors. I am not saying that we should not do the best we can. If we raised the price of the meat 5p, as you suggested, that would only be the tip of the iceberg for farmers’ needs. The farmer needs Government intervention in this emergency situation. Sterling is overvalued and that is crippling the industry.

I appreciate what is being said here today. Farmers are our lifeblood and we want to co-operate. We have spent millions on factories, to slaughter and bone cattle. The industry has got to work because we need it. Most of the meat plants owners are farmers themselves. There is no money in farming. Relationships have never been better, no matter what the minority of farmers say.

Mr Ford: In paragraph 4(e) of your submission, you state that Northern Ireland is currently losing ground to neighbours, both in Scotland and the Republic. In the Republic of Ireland, Farm Quality Assurance Scheme legislation is in place and the voluntary standards conditions in Scotland are higher. Can you tell us why we have lost ground, what is the cause and how can we put it right? You have suggested that we need to look to the lifetime Farm Quality Assurance Scheme legislation here; could you explain that? Mr Moore referred to £6 to £10 bonus for better quality cattle. That is insufficient reward from the market to compensate farmers for meeting the higher standards that you say we need.

Mr Duffy: I will make one point and then answer your question. There is an oversupply in the chain, much of which is down to the current subsidy system and the over 30-month scheme that we are obliged to operate. We do not want such volumes of cattle, but that is outside our control and we have to handle them. We would welcome a lot more in four or five weeks’ time.

With regard to the Farm Quality Assurance Scheme others have looked and learned and adopted many of the approaches that we have taken. There is a lot of work being done on funding a scheme that could go into lifetime assurance arranged jointly between the producer and processor. We are also looking towards updating and de-regularising the APHIS computer scheme and bringing it in as a major marketing tool in our export effort. We have lost ground in some areas, purely because others have copied what we have and improved their systems. The Government of the Republic of Ireland probably see farm legislation as the easiest way out; we are trying to do it on a voluntary basis in Northern Ireland with a market-led approach.

Bonuses in the region of £10 to £15 are paid although I would still contend that that is not enough at the upper end and that too much is being paid at the lower end. We are endeavouring to address that. Unfortunately, although subsidies take up 50% of the value of the animal — and will continue to do so, according to Agenda 2000 — that bears no relation to the quality of the animal. That is a problem we have to live and work with.

Mr Moore: Those bonuses are paid on top of the price already paid. The spread of price is as much as £100 per animal.

Mr Bradley: The Committee’s agenda from the beginning has been to address farmers debt and get a better deal for farmers. I assure you that you are not alone in facing these questions. We questioned the multi-national supermarkets and the banks on prices. For some reason, that did not get as much publicity as the meat trade. Do not feel that you are being singled out in any way. I also welcome your support for a possible enquiry that can deal with the allegations, once and for all.

I looked at your reply to a question about whether NIMEA would be prepared to contribute financially to resolving the fragmentation at producer level. I am sure that the Committee appreciates your willingness to explore ways of overcoming the problem. You have not, however, answered our question: would NIMEA be prepared, in the right circumstances, to make a financial contribution to a move which would be of great benefit to the industry? We have put that question to the other players and we need your answer. Let me ask that again: are processors willing to make a significant financial investment in creating the kind of supply chain which a modern industry needs to be efficient?

Mr Tweedie: We are willing to invest and have been investing. As I said earlier, there are 3,500 farmers in our producers club. We have invested a lot in that. We have four men on the road all the time, advising on Government grants and how to produce better beef. We are now getting computers onto farms, at subsidised rates, to help farmers do their books. We are really spending a lot of money in this fashion. If the Committee can come up with a system that is better than ours, we will be happy to look at it. We have invested hundreds of thousands of pounds annually on the relationship, making things better for farmers and getting them to produce better cattle. We are willing to get involved in anything that is better than what we have. Individual companies have individual needs for individual customers, so it is sometimes very hard to have a co-operative supply chain for everyone. We are willing to consider anything you can recommend to us.

Mr Duffy: In these working groups the industry has come together with the LMC to co-fund promotional marketing issues regarding the levy for the LMC budget, the Farm Quality Assured Scheme and its funding, and the red meat strategy. That is the most effective way, until the reports are produced by the Agri-vision Group on how the money could best be spent, centrally or individually by the various plants on promoting Northern Ireland produce.

Mr Armstrong: I am pleased to hear that the Northern Ireland Meat Export Association is not encouraging production of bull beef; I believe in naturally produced beef. We do not need any more beef than there already is. Dungannon Meats has a half page feature in the recent ‘Farming Life’ promoting the production of Holstein beef. I mention that simply to point out that at least one of your major members is forming a club for the purpose. Our concern is not that Holstein cows have bull calves or that farmers strive to maximise their profits. It is that bull beef, once it enters the processing chain, will be in danger of diluting product quality. What steps are your members taking to ensure that this does not happen? In my view, since we have meat coming from other sources and it is not farm quality assured, we do not know what it is really, and it is not of the same standard.

I do not believe that the Farm Quality Assured Scheme in Northern Ireland is doing justice to the meat plant. There is a great differential between the price the farmer gets for his product and what the meat plant gets for it. Meat plants are always sure to have good profit. Nobody considers that the farmer needs a profit to provide the product for you at the quality that you expect.

Mr Duffy: Unfortunately, yet again, the whole agenda has been driven by Agenda 2000 and the changing subsidy system. Part of the vision for the future of Northern Ireland agriculture is the creation of differences and niches. In Northern Ireland our strength is our size. With regard to the black and white bulls, there was and still is a niche there to replace the CPS scheme. In the past six months, and at present, it has been one of the most attractive schemes for producers and they will openly admit that. We have been a successful producing country in the past, and we should not lose sight of that.

Our company is promoting a scheme which will be contractually binding on a small number of producers whom it suits to produce that meat. There is a market there and a certain premium for it, so there is nothing wrong. It is a commercial message with a commercial focus.

Steer production is our main production portfolio — about that we cannot delude ourselves. Those animals, as well as the bulls, will be part of the chain. They will also have to have quality assurance and traceability for the consumer. One of the reasons why people look to us, even in the small niche markets, is that they know that we can give them assurance of quality. It may be of a different quality, but there is still a market for it.

Mr Armstrong: Yes, but we do not want the number of farmers producing bull beef to increase.

Mr Duffy: Hence the clear message that we have put through the LMC. Unless the producer has a contract for his produce in that area, he should definitely not get involved in the ad hoc production of young bulls. I know this from past experience, so I agree with you.

Mr Tweedie: A year ago, when the calf schemes disappeared, young calves were being shot and buried in the ground; in fact, that was shown on television. Our company, along with other companies, approached the supermarkets and said that we would take these young bulls and feed them for manufacturing purposes. We then launched a bull scheme and people contracted to feed 10,000 bulls. Those bulls are coming to the market place now, so that was an alternative to shooting and burying the calves or the farmer receiving £10 to £15 for them.

Ten thousand of those cattle are now coming to the market place and we give people a guaranteed price for them, a price based on the market price plus a bonus on the low graded cattle. Today, they are receiving £50 a head more for the cattle than anticipated. Everyone who entered the scheme is making a profit and we can bring you those members to show evidence that that is happening. Thus a lot of bull beef has been brought on for manufacturing purposes.

Mr Duffy: The value of that calf now in comparison to what it was 12 months ago in itself justifies the returns that have been given.

The Deputy Chairperson: As a bull producer, I congratulate you on seeing the niche in the market and taking the initiative. As Mr Tweedie said, it is better to keep the animals on and finish them rather than shooting them.

Mr Paisley Jnr: I have visited a number of plants in the past and that has proved to be a useful learning exercise, although it does not get to the heart of what we are discussing today. It would assist if the invitation were open for us to look around the plants at any time.

I do not think that the Committee is suggesting that co-operative groupings become involved in processing but rather that they be a means to creating the more responsive supply chain that the industry lacks.

In your correspondence with us, you mentioned producer clubs. Will you explain how these clubs work? Are they contracts between the partners? Do club members enjoy price advantages over non-club members? What demands are made on club producers beyond those which would be to made on other suppliers? That would help us gauge the difference between beef producer clubs and the co-operatives that were mentioned earlier.

There has been good co-operation around this table in the past. For instance, in the beef labelling categorisation scheme, we worked hard and actually achieved something. I also remember being in a meeting with the leader of the SDLP and, I think, Jim Nicholson. We made major progress on that issue and the entire industry welcomed that. It is important that co-operation continues.

Mr Tweedie: In Ireland, we now have a retail packing plant, which takes beef from slaughter and brings it straight to the retail parks. In one visit, we can now do three or four things. We can identify the return to the farmer, the price of the meat and the retail price to the supermarket all in one place. Northern Ireland has the only packing plant in Ireland where this can be done. There is more transparency, which means that we can even show the retail price of meat in the supermarkets, and we can show you what we are charging them. We are happy to do that.

My other point is about producers clubs. The life of a supermarket now depends on being able to trace where food products originated. Buyers want to be able to go to the plants and find out where the animals have come from. We need to be able to take that buyer directly to the farm. We have to ensure that the farmer has a Farm Quality Assurance Scheme, that he is feeding animals correctly and that his farm meets the necessary standards. We must do that for all of our animals. In order for this process to be more effective, we encourage people to join our producers club. The farmers do not guarantee a supply, but we have found that 90 per cent of those in the supply chain keep returning to same plant, because a relationship has developed. We need producers clubs so that we can inform the supermarkets about where the animals are coming from. We also have bonus schemes for different types of animal. We organise educational trips and computers, we arrange shows, and there are many other benefits. The function of a producers’ club stems from the need to tell the customer where the animals originated. That is what a producers’ club is for.

Mr Kane: Could I be provided with a list of memberships of the association, including occupations?

The Deputy Chairperson: On behalf of the Committee, I appreciate your contribution this morning. I can assure you that I want to see all loose talk put to bed. Nobody benefits from it. Gentlemen, we appreciate your contribution; it has been a learning exercise for many of us. There are several more questions that we had hoped to ask, but some people were a wee bit long- winded. We will send those questions to you in writing.

Mr Duffy: We also appreciate the opportunity to come here. As the Minister said we are all part of the chain and have to work together.

The Deputy Chairperson: We had a period in Northern Ireland when there was no Government, but things are gradually coming together. As you have said, we are all part of that chain and there must be more co-operation between everyone involved. Thank you all very much.

One of the main issues to be considered in relation to price differentials between producers and retailers is that producers cannot ensure that the price they receive for a commodity will cover production costs plus a guaranteed profit margin

It is interesting to note that a brief summary of returns prepared by LMC over a year ago showed as follows:

The obvious point is that there is a vast difference in conformation of the two animals and the producer is being penalised for this. It should be noted however that in the case of the better quality animal the final supermarket and butchers prices were 238% and 275% respectively of the producer price. In the case of the poorer quality animal, there was an even greater differential, with the final prices being 296% and 339% respectively. Irrespective of the quality and price from a producer point of view the differential in money terms was the same. This takes us to the average producer prices for products, (DARD Statistical Review 1999).

The following table shows the drastic fall in prices for beef and pigs since 1995.

	Unit	1995	1996	1997	1998	1999 (provisional)
Finished steers & young bulls	Head	718	615	509	418	429
Finished steers, heifers & young bulls	Kg dwt	2.22	1.86	1.61	1.37	1.46
Calves slaughtered or exported	Head	154	89	69	62	46
Culled cows and bulls	Head	518	442	331	247	238
Culled cows and bulls	Kg dwt	1.77	1.62	1.34	1.10	1.07
Store cattle exported	Head	528	456	417	327	336
Finished clean pigs	Head	78.92	95.27	73.75	50.52	49.70
Finished clean pigs	Kg dwt	1.11	1.31	1.03	0.71	0.69
Culled sows & boars	Head	119	130	100	49	50

In the case of beef it is obvious that there has been a dramatic decline in price. In fact almost £300 per head or approximately 40%. This includes additional costs of over £30 associated with BSE. It is therefore quite difficult for a member of a farm family to comprehend the price of beef in the high street shop.

The fact is that there has been no significant reduction in retail price. In fact there would have been a gradual increase.

A combination of these factors has led disillusionment within the primary link in the food chain. There has been little significant reduction in input costs and farmers seem to have no control over a marketing strategy in relation to beef.

With regard to the pig industry, and whether the returns to the producers are fair, one only has to look at the production cost of 85p/kg and the average return/kg to producers for the past few years Fig.1. While there remained a small profit margin in 1997 the industry has been decimated in 1998/99. In fact losses per pig have been estimated at £12-15/pig produced.

In addition the industry has been subjected to additional costs in dealing with offal disposal and compliance with health and welfare legislation. There is no question with regard to the fairness of having to take less than production costs for a commodity nor is there any doubt of the fairness of not having a level playing field with regard to legislation particularly in relation to our competitors in the market place.

We have already lost a major part of our pig production and we cannot afford to let this continue. As with beef, the consumer is not benefiting from lower producer prices. In many cases, it is imported produce which is being given preference in our shops. Factors contributing to the crisis in the pig industry have been.

The fact that the pig industry is specialised with substantial capital investment in production systems with not alternative use has meant that producers were locked in. In addition the amount of individual debt accrued has meant that farmers have been trying to produce their way out of difficulties. The inevitable result has been bankruptcies.

Within the beef industry the loss of export markets due to the well documented BSE crisis and the strength of sterling have contributed to the present crisis. We also have additional burdens in both sectors with the cost of inputs due to our location.

Government has to devise both a long and short-term strategy for the industry. (It is interesting to note the term deadweight in some of the discussion in relation to early retirement etc.).

One only has to look around the countryside to see the state of dilapidation and disrepair emerging in many farmyards. We talk of protecting and enhancing our environment yet we ignore the fact that producers have no capital to maintain the infrastructure of the main business. It has often been stated that there will be no need for a long-term strategy if we cannot survive short time. Unfortunately short-term measures require capital. The funding allocated in the "Blair Package" is anything but adventurous and must be viewed sceptically in relation to 1999 incomes, longer term, the vision group which has been set up would seem to have major role in strategy development.

Market share has been bought in UK since the onset of BSE and while much work has been done to procure this, it is felt that it has been at the producer’s expense. We still feel strongly that there could be more of a return to the producer at current retail prices.

More promotional use of NI produce by retailers would also assist. With regard to all produce clear labeling is necessary to show country of origin etc. Questions have been asked regarding the production conditions and quality of imports in comparison with our commodities and it is incumbent on government to ensure that the consumer is protected from inferior produce.

The primary producer is already using the highest possible standards and incurring the associated additional costs. Differential in price for quality has been shown to be necessary so it is necessary to strive to produce the best possible quality stock. Input costs have been trimmed and there is little scope for movement here. Producer groups, co-ops and buying groups are all possibilities.

A co-ordinated food chain with all parties having equal responsibility and guaranteeing a decent return for each component part is perhaps over ambitious but all links are interdependent and each should realise this.

Thank you for your letter of 14 June 2000 seeking the views of the Ulster Farmers’ Union on the particular circumstances faced in the beef sector in the Province. Prior to our meeting with the Committee for Agriculture and Rural Development on Friday 30 June 2000 to discuss the issues involved, the Union would like to take this opportunity to comment on the specific areas of detail which you outlined in your letter.

It is fair to say that the Northern Ireland beef sector has been subject to tremendous economic pressure and structural change in recent years, particularly in the four year period since the onset of the BSE crisis. The effects of the beef export ban, imposed as a direct result of BSE, have been more severely felt in Northern Ireland than any other region of the UK, largely due to the traditional dependence which Northern Ireland had on premium price beef export markets outside the UK.

The loss of these premium value markets and the re-concentration of Northern Ireland meat processors to capture as large a segment of UK beef trade as possible in the aftermath of the ban has put immense pressure on the level of financial returns to producers. It is this lack of available competition in the beef market, which the Union considers, is the single greatest price-controlling factor at present.

Within the UK there has been much variation in the level of returns to producers following the imposition of the beef export ban. Northern Ireland producers are clearly at the bottom of this price league. On the basis of margins and profitability in the meat supply chain there has been much detailed analysis carried out to examine the fluctuations in prices at producer and retail level. Indeed, a major inquiry by the Competition Commission has been ongoing for some time, and earlier reports by MAFF, MLC and the London School of Economics have analysed in depth the major factors involved in the economics of the producer to retailer supply chain.

Whilst the factors involved are complex, the Union has long argued that there could be no real justification for the wide differences in cattle prices which have been evident between Northern Ireland and mainland UK. Undoubtedly this price differential has played a key role in the significant capture of GB multiple retailer trade by Northern Ireland meat processors.

One area where Northern Ireland producers have been severely disadvantaged relative to their GB counterparts has been the payments structure for differing grades of cattle (in terms of conformation and fat class). Work by the Livestock and Meat Commission for Northern Ireland has shown that there can be no justification for the price differentials which exist between a number of these grades when analysis of the yields of saleable meat are taken into account. This is an area where the Union has been concentrating its efforts in recent years to try and achieve a more equitable and justifiable payment system for Northern Ireland produced cattle.

(i) BSE: Without doubt the main contributing factor to the current crisis in the beef sector has been the BSE associated beef export ban. Loss of premium price export markets coupled with hugely cost burdensome BSE control measures have combined to push producer prices to critically low levels.

(ii) Currency Exchange Rates: The recent strength of Sterling relative to other European and world currencies has greatly disadvantaged producers in two main areas:

(iii) Cattle Grading: It is the Union’s view that payment differentials for cattle grades achieved under the current grading structure needs to be fundamentally overhauled. Producers in Northern Ireland have been penalised heavily in recent years by this unfair payments structure which clearly has not rewarded producers properly for the true value of their livestock.

The Northern Ireland Council of the National Beef Association is grateful for the opportunity it has been given to present this submission to the Committee for Agriculture and Rural Development.

It regrets however that as a result of not receiving the letter of advice until June 16^th it has struggled to meet the June 20^{th deadline
and that its submission is therefore not as detailed, comprehensive or as visionary
as it would wish.}

History may show that the period immediately before the BSE crisis of March 1996 was a high tide mark for the Northern Ireland beef industry and that the combination of factors that encouraged the export led, premium winning market that sustained such comfortable contemporary prices for finishers selling prime cattle may never again be repeated.

It is also unfortunate that the narrowing of the beef market to UK-only outlets over the last four years has not only decimated farmers’ incomes but also undermined the relationship between farmers and the beef factories to such a degree it can only be described as corrosive.

However there is hope that the widening of the delivery range for Northern Ireland beef through the Province eventually being allowed by the European Commission to operate under the same low incidence BSE trading conditions as the Republic of Ireland will lead to some recovery in both cattle prices and industry morale.

The National Beef Association would argue that if maximum advantage is to be seized from this development then every effort must be made by everyone in the Province with an interest in beef to place as much as possible on as many high priced EU and GB markets as possible.

And then for farmers to be reassured that their cattle really are being sold onto a competitive trading platform and that the prices they secure are transparent.

In our view this means measures must be taken by those able to act on behalf of farmers to counterbalance the overwhelming dominance of the five super-large slaughter companies in the Province by encouraging, and if necessary helping to establish, other competitive and effective means of placing significant volumes of either beef or cattle in front of alternative premium paying customers.

The initiators could be civil servants or entrepreneurs and there could be additional assistance through a range of marketing grants, clerical back up, secondary legislation or preferential loans.

The concentration in the Northern Ireland slaughter sector is without parallel elsewhere in the UK.

Our investigations have revealed that four companies operating out of eight factories account for 88 percent of prime cattle slaughterings and five companies working from nine sites have 97 per cent in their grip. (This contrasts with GB where the 22 largest plants account for just 48 per cent of throughput and over 100 others account for all but one per cent of the remainder.)

There is no single outstanding company – indeed the four biggest, and their factories, are all of roughly similar size.

It is also worth noting that ABP and Dungannon Meats are the most powerful slaughter operators in the UK.

ABP handles 227,000 cattle a year in total at its premises in Lurgan, and Newry and then Ellesmere, Shrewsbury, Perth and York on the mainland. Its overall share of the UK market is therefore around 12.5 per cent.

Dungannon Meats owns Rose County Foods at Clithero in Lancashire as well as its factories at Ballymena and Dungannon and handles 123,000 cattle a year – which is 5.5 per cent of the UK total and makes it the second largest beef processing company overall.

Significantly Dungannon Meats trucks in a very high tonnage of beef primals, the equivalent of at least of NI beef consumption, from GB for cutting and packing at its Dungannon plant before returning it to one of the mainland supermarkets. In our view this activity allows it to show less interest in NI cattle than it otherwise would do and therefore contributes to the low prime cattle averages recorded in NI compared with mainland GB.

If we use the R4L carcase classification as the point of comparison the gap between NI prices recorded in early June (154p) and those in GB (172p) is 10.5 per cent. A differential of 10-12 per cent was constant over 1999 and the first six months of 2000 too.

The NBA finds this discounting difficult to accept because prime cattle in Northern Ireland are similar in breeding and type to those in other parts of the UK, and are reared and finished in similar systems too, and so it would be difficult to differentiate between their beef.

One reason for low NI prices is the narrow range of markets imposed on the industry as a result of the export ban. In effect this means that the 80 per cent of production that cannot be sold inside the Province itself has to be sold into GB.

Total annual slaughterings within the Province are around 360,000 head – which is the equivalent of 17 per cent of UK production.

However, immediately before the export ban (when prime cattle prices were 2-3 per cent above the GB average) only 30 per cent of NI production was sold within GB and 50 per cent was traded on higher priced markets in Europe.

In current circumstances it is impossible to avoid concluding that it is convenient and immensely profitable for these companies, particularly Foyle, Dungannon and ABP Newry which have a long established relationship with GB supermarkets, to buy discounted beef in Northern Ireland to sell in GB and that the prices they pay for cattle are uncompetitive.

There is also evidence that suggests that when prime cattle supplies are thinning down in the North and ex-farm prices are lower in the South the majority of factories will truck in a tactically significant number of cattle from the South so that they can maintain throughput without hardening the price of Northern animals.