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Irish Examiner - Farming - - COMMENT -

IFA Live­stock Chair­man An­gus Woods led an IFA del­e­ga­tion which re­cently brought se­ri­ous al­le­ga­tions against beef pro­ces­sors to se­nior of­fi­cials in the Com­pe­ti­tion and Con­sumer Pro­tec­tion Com­mis­sion (CCPC). An­gus Woods told the CCPC di­rec­tor of merg­ers that farm­ers do not be­lieve that there is ad­e­quate price com­pe­ti­tion in the beef sec­tor. He said it is the CCPC’s re­spon­si­bil­ity to guar­an­tee ro­bust com­pe­ti­tion in the beef pro­cess­ing sec­tor, and farm­ers had seen no ev­i­dence that the CCPC were pre­pared to tackle the com­pe­ti­tion is­sue in beef pro­cess­ing.

It’s a very long-run­ning row be­tween cat­tle farm­ers and beef pro­ces­sors, which flared up in 2016 when Larry Good­man’s ABP pur­chased 50% of Slaney Foods. At the time, Meat In­dus­try Ire­land (MII), rep­re­sent­ing pro­ces­sors, dis­missed IFA con­cerns about com­pe­ti­tion, point­ing out pro­ces­sors were pay­ing 10% over the EU av­er­age for cat­tle in Ire­land, in­di­cat­ing very com­pet­i­tive mar­ket con­di­tions. MII said the Ir­ish in­dus­try ex­ports 90% of its prod­uct into mar­kets where cat­tle were cheaper than in Ire­land, in­di­cat­ing ex­tremely strong com­pe­ti­tion com­pared to other EU mar­kets.

Ir­ish cat­tle prices had risen by over 40% in five years, ac­cord­ing to MII, which said farm­ers should fo­cus in­stead on chal­lenges and risks aris­ing from Brexit. IFA are back on the warpath to the CCPC, be­cause of a pro­posed merger be­tween two of the coun­try’s big beef pro­ces­sors, Dawn and Dun­bia. IFA can­not be blamed for keep­ing the CCPC on its toes. Af­ter all, the beef in­dus­try world­wide is not known for be­ing squeaky clean.

And con­tin­u­ing rev­e­la­tions about the world’s largest meat pro­ces­sor, JBS, are enough to frighten any live­stock farmer around the world.

JBS has be­come a by­word for shady prac­tices, and it was all made pos­si­ble by the lack of an ef­fec­tive CCPC in Brazil to guar­an­tee ro­bust com­pe­ti­tion. JBS ex­panded fast from 2008 to 2012, from own­ing 13% to 51% of the abat­toirs in Mato Grosso, the Brazil­ian state which has 30 mil­lion cat­tle — the world’s sec­ond-big­gest beef pro­ducer af­ter the US. The JBS ex­pan­sion, backed by left­ist gov­ern­ments and bankrolled by Brazil’s state im­prove­ment fi­nan­cial in­sti­tu­tion, left ranch­ers fac­ing a near mo­nop­oly sit­u­a­tion. JBS also rented abat­toirs from smaller com­pa­nies, but closed them, to fur­ther dom­i­nate slaugh­ter­ing ca­pac­ity. The ex­pan­sion helped JBS pur­chase com­pa­nies world­wide, from the UK to Canada to Aus­tralia. But shady prac­tices were rife, and the com­pany is now in big trou­ble. It has even plunged Brazil into a cor­rup­tion furore that’s likely to drag down the gov­ern­ment.

First hit last March by the “Weak Flesh” scan­dal in which JBS and other comBut pa­nies were ac­cused of brib­ing in­spec­tors to OK sub-stan­dard meat, JBS was then hit by rev­e­la­tions that its for­mer chair­man se­cretly taped Brazil’s Pres­i­dent Michel Te­mer al­legedly dis­cussing bribes. An ex­ec­u­tive ad­mit­ted the com­pany paid €158 mil­lion in kick­backs to 1,829 politi­cians. And in late June, the US sus­pended im­ports of Brazil­ian beef, cit­ing con­cerns about meat safety. Ranch­ers have felt the fall­out, with cat­tle prices fall­ing. Some fear they could be down 22% by year-end.

Like IFA, they are on the of­fen­sive. How­ever, un­like the Ir­ish farm­ers rep­re­sented by IFA, the big­gest Brazil­ian ranch­ers have 150,000 to 200,000 head of cat­tle. They are bid­ding to come to­gether in co-ops to ac­quire and re­open closed slaugh­ter­houses, in­clud­ing some of the 16 JBS abat­toirs in Mato Grosso, of which only 11 were open for busi­ness.

It’s ob­vi­ously a dif­fer­ent world in Brazil, but cat­tle farm­ers here can­not be blamed for their vig­i­lance as merg­ers con­tinue in the beef and sheep sec­tors.

It’s bet­ter all round to keep things com­pet­i­tive.

Even JBS might agree. With its share price tum­bling, and a huge €15.8bn debt bur­den, the com­pany is re­trench­ing, sell­ing as­sets in Ar­gentina, Paraguay, Uruguay, Canada, the US, and North­ern Ire­land (where it owns the Moy Park poul­try en­ter­prise).

“MII said the Ir­ish in­dus­try ex­ports 90% of its prod­uct into mar­kets where cat­tle were cheaper than in Ire­land, in­di­cat­ing ex­tremely strong com­pe­ti­tion com­pared to mar­kets” other EU

Tul­lam­ore Show and AIB Na­tional Live­stock Show (www.tul­lam­ore­show.com)

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