The beef farmers’ protests that disrupted meat processing in the past two months had echoes of France’s recent gilets jaunes movement: hi-vis jackets worn as the uniform of the exploited rural little guy; defiance towards existing representative organisations; tension fuelled by despair and a heavy-handed response through the law and its agents; all sparked by an immediate cash crunch illustrating a much wider challenge that protesters, business and authorities have struggled to grasp.

In France, the announcement of a higher carbon tax on motor fuels led to the painful realisation that in the shift away from a fossil fuel-based economy – with individual petrol or diesel car ownership entering its dying days – no alternative was available to large portions of the population.

Here, the trigger has been savage beef price cuts. Unlike previous years, this summer’s peak carcase price for male cattle never crossed the €4/kg mark, seen as break-even point for most farmers. Since then, the seasonal price drop has turned into a dive into the abyss. European Commission figures show that prices for Irish male cattle fell behind UK levels in July, then behind the EU average in August, heading below the €3.50/kg mark for the first time since 2011.

Price guarantee

The protesters who blocked livestock deliveries at the Liffey Meats factory in Ballyjamesduff, Co Cavan told The Currency that they wanted the price returned to €4/kg. “It has to be guaranteed for six months at least,” one farmer added. They were taking shifts in a cattle trailer equipped with a gas stove and declined to give their names after processors launched legal actions against identified protesters.

EU prices – including in the UK, which consumes nearly half of all beef produced in the Republic – have been falling, too. There are no signs of immediate improvement, with still high numbers of cattle approaching slaughter age coming off grass this autumn, despite a record kill for the past year.

Ibec’s sector branch, Meat Industry Ireland, argues that “Irish farmers are paid the same average price for their cattle as their European counterparts”. While this is true, it does not make either sustainable.

This is before we even consider Brexit disruption, ranging from guaranteed sterling volatility in the lead-up to the October 31 deadline to full-on chaos in case crippling WTO tariffs and border checks apply in a no-deal scenario. 

Even if the traditional pre-Christmas price rebound materialises in December, this year is now set to return the lowest average farmgate beef price since the previous flare-up of factory pickets in 2014. 

“I’ve reduced my livestock numbers by 70 per cent in the past four years and this is the first year I have any money in me pocket.”

Protesting farmer

Farm input costs have risen in the meantime, squeezing margins. According to Teagasc, just 11 per cent of suckler farms and 26 per cent of beef finishing farms were viable without an off-farm income last year. Despite drawing over €13,000 in EU direct payments, the average suckler farm returned an income of €8,310, effectively losing almost €5,000 on cattle. “I’ve reduced my livestock numbers by 70 per cent in the past four years and this is the first year I have any money in me pocket,” one protesting farmer said.

Protests and successive rounds of talks held in August and September have focused on immediate pricing issues – with the awkward caveat that price itself could not be negotiated under competition law. Farmers, processors and State agencies have agreed to review the rules used to adjust payments for cattle quality and increase bonus payments for the best animals. Promises to increase transparency on value sharing, vague at first, were firmed up in the latest agreement reached on September 15, but still fall short of a commitment to reveal the margins achieved by factories and retailers. 

Amid recent media reports that Larry Goodman’s ABP group has annual profits of at least €170 million, the opaque corporate structures of ABP, Dawn Meats and Kepak have long fuelled speculation and resentment among farmers. Together, the three groups control 60 per cent of the national kill, and much of the UK market too.

“The only thing the factory is losing when an animal goes in there is its breath,” a protester said. “Everything else, there’s money in it.” He urged more transparency and criticised feedlots owned or contracted by processors, which farmers routinely accuse of selectively releasing cattle onto the market to influence prices.

Should half of the country’s farmers and 10,000 industrial jobs continue to depend on a high-volume beef export model so firmly rooted in the past?

Yet tinkering around the edges of beef pricing arrangements and introducing more transparency will do nothing to address the fundamental question: should half of the country’s farmers and 10,000 industrial jobs continue to depend on a high-volume beef export model so firmly rooted in the past?

Ireland’s colonial-era role as Britain’s agricultural backyard is fast coming to an end. The Brexit vote has set the scene for a UK open-door policy for cheap meat imports from the Americas and Oceania, against which it will be impossible to compete on price.

Amid the recent outcry over Amazon forest fires clearing land for agricultural production, Brazilian meat exporters are quietly developing a two-tier production system, with higher-end, greener beef targeted to the more lucrative markets Ireland depends on.

Implementation of the proposed EU-Mercosur trade deal, though years down the line, will in turn increase price competition in continental Europe, Ireland’s second largest beef export destination after the UK. 

All those markets are already seeing reductions in beef consumption. A Bord Bia survey of consumers in Ireland, the UK, Sweden, Germany and the US last year found that one in five had adopted some form of meat-reducing diet. Beef is the prime target and the less meat in the diet, the younger the consumers – a sign of things to come.

The dairy industry has diversified its markets, using grass to cut costs, technology to enter the infant formula and ingredients sectors, and marketing to shift mountains of butter. The beef industry, which is only emerging from two decades of health export bans following the BSE crisis, has not – or not yet.

Back home, there is no escaping the fact that cattle alone directly account for over 19 per cent of Ireland’s greenhouse gas emissions as reported by the EPA, on a par with electricity generation and transport. Beef animals were responsible for nearly twice as much emissions as dairy herds in 2017. Their emissions per unit of meat produced may be among the lowest in the world, but beef remains by nature one of the most carbon-intensive foods you can eat. Water quality, too, is under pressure from nutrient loss off cattle slurry.

2.4 million cows

Between 1987 and 1997, the number of suckler cows – producing solely beef calves – more than doubled, from 455,000 to 1.2 million. The past two decades, when Ireland carried over a million sucklers, have been an exception.

This is the legacy of the EU’s Common Agricultural Policies (CAPs) of the 1980s and 1990s, when dairy production was curtailed by milk quotas while export subsidies encouraged beef farming and processing – somewhat controversially, as exposed by the Beef Tribunal. 

Meanwhile, dairy cow numbers fell as farmers filled their quota with more efficient animals and practices. But these have gone up again since the “shackles” of milk quotas were lifted in 2015. Ireland is again carrying the record 2.4 million cows it previously hit in the late 1990s. Beef production continues to grow because cross-bred animals by beef bulls out of dairy cows are destined for meat production. This now seems to have stabilised as suckler decline makes up for continuing dairy expansion. 

The next CAP from 2021 (or whenever Brexit and the EU’s ensuing budgetary uncertainty allows) will target 40 per cent of its funding towards reducing greenhouse gas emissions. Further down the line, we are facing the ineluctable extension of carbon taxes already levied on energy to the food sector. This will probably be decided at EU level and apply at the point of consumption.

Doomed model

In this context, the current model of paying Irish farmers EU money to export over half a million tonnes of loss-making, high-carbon beef to declining, fully supplied European markets dominated by the UK is doomed. What is the alternative?

Current policy is to open new export destinations outside Europe. The main focus has been on shipping live cattle to the Middle East and North Africa, and beef to Asia, where diets are becoming more western and the African swine fever epidemic has deeply disrupted pork production. 

This strategy hinges on success in China, where Irish beef was allowed in for the first time last summer. From 1,200t in the second half of 2018, exports there have grown to 3,000t in the first half of this year as more factories continue to pass Chinese inspections. Volumes routed through Hong Kong have also increased. 

The Irish bet is that China’s beef imports are set to become so enormous that carving a small niche out of that market would be sufficient to support Ireland’s industry.

EU trade deals, such as recent ones with Vietnam and Japan, are opening new opportunities. Bord Bia is targeting Indonesia next. Entering those Asian markets means competing with their established nearby beef supplier, Australia, and low-cost Brazil.

The time required to develop this trade, however, is clashing with the urgency of Brexit. This year’s Irish beef exports to China including Hong Kong will equal one month of shipments to the UK, at best.

“Accelerated decline in suckler cow numbers would be an important contribution to emissions reductions.”

Climate Change Advisory Council

The next deadline is Ireland’s climate change targets. In August, the Climate Change Advisory Council advised that “accelerated decline in suckler cow numbers would be an important contribution to emissions reductions”. The Council modelled three scenarios, all of which assume the dairy herd will no longer expand beyond 2018 levels. 

Suckler numbers would need to drop from just under one million currently to 711,000 by 2030 to bring agricultural emissions back in line with the 2005 reference year used in EU targets. The suckler herd would need to be cut by half, going back to pre-milk quota levels, for farming emissions to achieve a 6.7 per cent reduction below 2005 levels. The EU target imposes a cut of at least 20per cent across agriculture, transport and heating (net of allowable flexibilities such as carbon sequestration in trees).

The IFA argues that reducing beef production here will only result in export markets being snapped up by more carbon-intensive producers, such as Brazil. This is probably correct – however all EU countries including Ireland have agreed to target emissions within their borders, assuming others will do the same under the global Paris climate agreement. Unless we can reverse layer upon layer of European and international policy, this ship has sailed.

These scenarios and the export environment point to a different beef industry. It doesn’t have to be life or death, as many protesters fear – a return to prices above €4/kg for nearly 2 million cattle a year, or the wholesale shutdown of suckler and beef farming and the communities it supports. 

Less is more

Their salvation is more likely to come from a less talked-about outcome of the recent talks – Bord Bia’s plans to brand suckler beef as a quality product and develop a protected geographical indication (PGI) for Irish grass-fed beef. The exact type of animals eligible to PGI branding has yet to be decided. It will be controversial – those within this premium market are likely to secure higher prices, but those outside will still face the issues raised above on highly commoditised markets, and the question whether their production is worth pursuing at all.

While a proportion of dairy-bred beef, cheaper cuts and offal will continue to depend on low-cost European ground beef demand and growing mass Asian markets for outlets, it does not make sense to continue marketing high-value cuts from suckler herds with strong biodiversity, water and social credentials through the same channels – and at the same price.

“When we’re selling grass-fed Irish beef, it needs to be grass-fed Irish beef,” a protester summarised.

Whether it’s on the tables of environmentally-conscious German families, who increasingly restore beef to its status of occasional, luxury product, or those of flashy Shanghai restaurants, the meat produced by the farmers who have been picketing factories has a future. Irish processors have the efficiency and the international reach to get it to market. There just needs to be less of it, produced to ever more stringent standards and higher prices.

Ireland’s competitors are getting this message. On a visit to this month’s National Ploughing Championships, Dutch ambassador Adriaan Palm said his country’s staggering €90 billion food exports (over seven times Ireland’s worth) would focus on smaller, more valuable niche markets in the future. Dutch farmers are already forced to cut livestock numbers because of environmental breaches. Meanwhile, “in the Netherlands, Irish beef is seen as a premium product. If you want a premium product you have to pay more,” Palm said. 

The Government’s €100 million beef exceptional aid measure currently open to farmers is a timid acknowledgement of this reality, with a payment of up to €11,600 available to farmers who reduce their herd size by 5 per cent on the condition that they take part in agri-environmental schemes. Department forecasts show that most eligible farmers will receive under €700 each – a far cry from the investment required to transform the 70,000 farms concerned into profitable businesses.

Pared down suckler and beef farming will not only deliver higher prices, it will also free up farmers’ time and land to develop alternative, lucrative enterprises on their holding. Dairy farmers are already shipping young heifers the length and breadth of the country, looking for experienced stockmen who can contract-rear them until milking age. Forestry, energy crops, solar energy and use of land to deliver paid-for environmental services are all set to grow, especially on lower-quality farmland. 

If those industries refrain from land-grabbing and include farmers in their development alongside traditional livestock enterprises, everyone will gain.