# Are farmers not covered by the Competition legislation?



## Brendan Burgess (13 Aug 2019)

Farmers are business people supplying a product and competing with others.

How come they are allowed to organise themselves to try to control the price of beef? 

Surely the market should be allowed to decide that? 

If the meat processors had a meeting to discuss controlling the price they pay to farmers, I presume that they would go to jail for it. 

Brendan


----------



## jpd (13 Aug 2019)

My understanding of the problem is that there are not "meat producers" but one huge "meat producer" and a lot of small ones that just ride along, so farmers are essentially price takers with little or no competition. The retailers, of course, are delighted to offer low price meat to consumers who are delighted to have cheap burgers, steaks, etc


----------



## NoRegretsCoyote (13 Aug 2019)

It's a good point Brendan.

Several years ago the then-Competition Authority successfully managed to stop the IMO negotiating on behalf of GPs. This was on the grounds that they were sole practitioners and were not allowed to collude on price setting.


----------



## galway_blow_in (13 Aug 2019)

The largest processor player ( LG) has himself a massive feed lot, he is able to manipulate the market as a consequence some of the time due to having his own supply much of the time

Not saying this is the overarching factor, right now the weak pound is a huge contributor, beef sector far too reliant on the UK market


----------



## PaddyBloggit (13 Aug 2019)

A piece on the Indo about it: https://www.independent.ie/business...-as-talks-cannot-discuss-prices-38398554.html


----------



## Peanuts20 (13 Aug 2019)

No, they are not strictly covered. They have an exemption and can organise themselves into what are known as "producer organisations" which would include the IFA and ICMSA. These organisations can then negotiate collectively.


----------



## Easeler (13 Aug 2019)

Hand outs more hand outs needed to keep the big tractors and jeeps on the road.I live down here in farming country you wouldn't get much off them, they don't give much back to the community, we were trying to get a farmer to to push his boundary back a couple of meters along a busy stretch of road so kids could walk to school safely he wouldn't give it. It's a case what's in it for me.


----------



## NoRegretsCoyote (13 Aug 2019)

PaddyBloggit said:


> A piece on the Indo about it: https://www.independent.ie/business...-as-talks-cannot-discuss-prices-38398554.html



Genuine question: aren't beef prices set on world markets? Or are there factors which mean Irish prices aren't influenced by prices abroad?


----------



## galway_blow_in (13 Aug 2019)

NoRegretsCoyote said:


> Genuine question: aren't beef prices set on world markets? Or are there factors which mean Irish prices aren't influenced by prices abroad?



No, they are not comparable to grain or soybeans etc


----------



## Brendan Burgess (13 Aug 2019)

PaddyBloggit said:


> A piece on the Indo about it



Hi Paddy

That is great to see that the Competition Authority is raising the issue 

_Angry farmers have lashed out at the Competition and Consumer Protection Commission (CCPC), calling its rules and enforcement structure "a joke".
It comes after the commission told the Beef Plan Movement (BFM) its two-week protests outside meat plants may be unlawful and discussions about future pricing intentions is not allowed under competition law._

Brendan


----------



## NoRegretsCoyote (13 Aug 2019)

galway_blow_in said:


> No, they are not comparable to grain or soybeans etc



How so?

Do Irish beef prices have zero correlation with global prices?


----------



## galway_blow_in (13 Aug 2019)

NoRegretsCoyote said:


> How so?
> 
> Do Irish beef prices have zero correlation with global prices?



You asked if there was an international price benchmark as is the case with grain, the answer is no


----------



## Delboy (13 Aug 2019)

3 meat processors account for 90% of that industry here. I wonder how much price variance there is between them and have the Competition Authority ever looked in their direction


----------



## jpd (13 Aug 2019)

I hope you are not implying that they somehow worked together? people have been sued for less!

Adam Smith: The Wealth of Nations "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. "


----------



## Peanuts20 (13 Aug 2019)

galwaypat said:


> Hand outs more hand outs needed to keep the big tractors and jeeps on the road.I live down here in farming country you wouldn't get much off them, they don't give much back to the community, we were trying to get a farmer to to push his boundary back a couple of meters along a busy stretch of road so kids could walk to school safely he wouldn't give it. It's a case what's in it for me.



Sounds a bit like Bus Connects in Dublin, its not unique to farmers


Current price a factory pays a farmer for a kilo of beef €3.65 or so depending on the quality
Price Tescos will charge for a kilo of  beef- approx €10 depending on the cut and process, say €8 to €12 

Take away all the subsidies and handouts a farmer gets, let him charge a market rate based on costs + margin and then do the maths as to what your weekly steak will cost


----------



## Romulan (13 Aug 2019)

Selling raw material and being a price taker is not where you want to be and they should have been trying to pivot away from the current position for years.  Now they face the twin storms of BREXIT and Green/environmental pressures never mind the problems of the industry structure.

They also appear to favour being a business when it suits them and not being a business when it suits them and I think this is a factor in there being very little sympathy for them.

This is something that has vexed me from some time and I always raise it with my rural family in laws.
My late FIL was quite an economist and could discuss at length.

I'd love to know what happened to the likes of the farmers that setup co-ops and met challenging times head on in the past?

Why not set up your own factories, or drive the development of local farmers markets, or better links to local butchers etc. etc.


----------



## Setanta12 (13 Aug 2019)

galway_blow_in said:


> You asked if there was an international price benchmark as is the case with grain, the answer is no



Isn't milk internationally benchmarked? Why not beef?


----------



## Delboy (13 Aug 2019)

Peanuts20 said:


> Current price a factory pays a farmer for a kilo of beef €3.65 or so depending on the quality
> Price Tescos will charge for a kilo of  beef- approx €10 depending on the cut and process, say €8 to €12


I heard a discussion on this on the radio yesterday with the head of the IFA.
He said the farmers were getting €2 per kilo, the meat processors were taking a €2.90 piece of the action and the retailers were on around €5.90


----------



## Romulan (13 Aug 2019)

I have heard the same discussion on the radio about farmers/processors/retailers for as long as I can remember.

The world has changed and the model no longer works.

Many older members in my family were involved in an industry that died out in the late 80s, car assembly.
They all had to adapt, change, move on to other ways of doing things.

Not pleasant, unwelcome at the time and difficult but it had to be done.

I see the IFA as part of the problem, same old same old

And lest anyone think otherwise, I would love to see a strong vibrant farming industry.


----------



## galway_blow_in (13 Aug 2019)

Setanta12 said:


> Isn't milk internationally benchmarked? Why not beef?



I can't answer that one I'm afraid but I check out the agri press on and off and the same benchmarks are not used, milk price auctions in new Zealand effect the dairy market here but beef seems more autonomous


----------



## Purple (14 Aug 2019)

There is no margin anywhere in the beef sector. Processors are not invested in capital, and have not for years. Supermarkets use beef to generate footfall. There's no one making a fortune at the poor farmers expense.

Given that the majority of farm incomes come from welfare and handouts (what was once called farmers dole) how much does the price they get for beef really matter? If they moan enough the rest of us will just have to pay them more to continue to run their businesses badly. 
I'd also love to see a vibrant farming sector but that will require major structural change so it won't happen. It would "rip the heart out of rural Ireland!", yea, like ribbon development has already done.


----------



## Bronte (14 Aug 2019)

galwaypat said:


> Hand outs more hand outs needed to keep the big tractors and jeeps on the road.I live down here in farming country you wouldn't get much off them, they don't give much back to the community, we were trying to get a farmer to to push his boundary back a couple of meters along a busy stretch of road so kids could walk to school safely he wouldn't give it. It's a case what's in it for me.



Would you give up your road frontage or garden for free?  Maybe the people in Dublin who are going to be paid for losing part of their gardens should give it for free in the interest of the people travelling on buses.


----------



## Easeler (14 Aug 2019)

We already have given 3 meters away anyone that has built a house in the last 30 years has had to keep they front wall back 3 meters from the road and rightly so.


----------



## candor (15 Aug 2019)

As already mentioned, the selling model is broken and has been for years. The idea of businesses having active subsidies based on business activity many years ago is baffling. 

It's said that we have some small amount of years of harvests left before our soils are depleted if current farming practices continue.

Personally, I would rather purchase local food from local farmers that have the highest standards of beyond organic production which are building soil rather than depleting it. This would allow viable local farm businesses to stand on their own without subsidies and serve the community with clean, environmentally beneficial food.


----------



## jpd (15 Aug 2019)

candor said:


> Personally, I would rather purchase local food from local farmers that have the highest standards of beyond organic production which are building soil rather than depleting it. This would allow viable local farm businesses to stand on their own without subsidies and serve the community with clean, environmentally beneficial food.



Very noble, but how would that work with the 1 million people living in Dublin?


----------



## Peanuts20 (15 Aug 2019)

jpd said:


> Very noble, but how would that work with the 1 million people living in Dublin?



Also what happens all the beef and meat used in restaurants, in fast food outlets etc?. Reality is that cheap food comes at a price and that price is subsidies in one form or another.


----------



## county (15 Aug 2019)

[


Romulan said:


> I have heard the same discussion on the radio about farmers/processors/retailers for as long as I can remember.
> 
> The world has changed and the model no longer works.
> 
> ...



Exactly the consumer is demanding cheaper food and therefore the model of beef production will change from an extensive(expensive) grass fed product to a more intensive feedlot type structure such as that operating in US which will be largely a grain fed animal.  This is happening already as factories are growing their feedlots to supply themselves with beef in times of reduced supply.  This prevents prices rising and responding to supply/demand and is therefore not an efficient market.  What hope have farmers in achieving price rises in this case. It may be an issue the CCPC could have a peep at aswell while they are looking at the farmers protest. I can see more of cheaper product being imported from Brazil etc in the years to come with little beef production being carried out in this country after this generation of farmers are gone as it is not viable selling beef at 3.60/kg when its costing over €4/Kg to produce.


----------



## candor (16 Aug 2019)

jpd said:


> Very noble, but how would that work with the 1 million people living in Dublin?



CSA (Community Supported Agriculture) is one model that would work, and has in other cities of larger populations. Basically you have a contract between the customer and farmer. The customer commits to buying particular produce during a season/year and the farmer commits to providing that.  There are other selling models too which can work quite well.


----------



## NoRegretsCoyote (16 Aug 2019)

candor said:


> CSA (Community Supported Agriculture) is one model that would work, and has in other cities of larger populations. Basically you have a contract between the customer and farmer. The customer commits to buying particular produce during a season/year and the farmer commits to providing that.  There are other selling models too which can work quite well.



I like to be able to go into a supermarket and buy what I like when I like.

Expecting consumers to enter into advance contracts with farmers on an individual basis is daft and impractical.

I have no idea which oil well my petrol comes from, nor do I care.

Free markets work exceptionally well at providing us with a vast choice of products for most of our needs.

I never understand why people think agriculture needs a completely different model from everything else.


----------



## county (16 Aug 2019)

NoRegretsCoyote said:


> I have no idea which oil well my petrol comes from, nor do I care.



This is the same principle that the consumer is now applying to food.  The consumer doesn't care whether beef if from Brazil, whether its hormone fed or whether its from the green fields of ireland,  in fact the consumer is becoming more and more unaware of how product is produced.  Price is the key for the majority of consumers at present. The market will respond to this by offering cheaper food which means a different farming model.

Personally I need to know where my product is sourced from and I am willing to pay extra for locally sourced produce, there will be a limited market for this type of product in future though I think.  I much rather eat and pay a premium for beef/food sourced from an Irish farm than something from outside EU.


----------



## odyssey06 (16 Aug 2019)

county said:


> This is the same principle that the consumer is now applying to food.  The consumer doesn't care whether beef if from Brazil, whether its hormone fed or whether its from the green fields of ireland,  in fact the consumer is becoming more and more unaware of how product is produced.  Price is the key for the majority of consumers at present. The market will respond to this by offering cheaper food which means a different farming model.
> Personally I need to know where my product is sourced from and I am willing to pay extra for locally sourced produce, there will be a limited market for this type of product in future though I think.  I much rather eat and pay a premium for beef/food sourced from an Irish farm than something from outside EU.



I think you are right re: the majority. 

But also more people would be willing to pay a premium, but not for something just because it is locally sourced if produced in same manner.
It needs to have something to distinguish it e.g. from cattle primarily fed \ grass grazed; organic; free range etc etc


----------



## Peanuts20 (16 Aug 2019)

candor said:


> CSA (Community Supported Agriculture) is one model that would work, and has in other cities of larger populations. Basically you have a contract between the customer and farmer. The customer commits to buying particular produce during a season/year and the farmer commits to providing that.  There are other selling models too which can work quite well.



CSA already exists but to be frank, it is a middle class initiative which is not suitable, realistic or scalable for the majority of people in Dublin. There is an arguement for moving to perhaps a model like France where local markets rather then supermarkets provide a lot of food. However CSA and markets are not realistic for bulk catering supplies for example.


----------



## NoRegretsCoyote (16 Aug 2019)

Peanuts20 said:


> There is an arguement for moving to perhaps a model like France where local markets rather then supermarkets provide a lot of food.



In France, like Ireland, the vast majority of food is sold through normal retailers.


----------



## jpd (16 Aug 2019)

NoRegretsCoyote said:


> In France, like Ireland, the vast majority of food is sold through normal retailers.


Totally agree


----------



## johnwilliams (16 Aug 2019)

bit puzzled  farmers states they are losing money on beef ,this has been going on for years so why do they still do beef ,most companies would have given up and moved onto something else ,what does their  bank managers think of this ,surely they would advise them to try something else?


----------



## Protocol (17 Aug 2019)

Goodman made 170m profit.


----------



## Protocol (17 Aug 2019)

Purple said:


> There is no margin anywhere in the beef sector. Processors are not invested in capital, and have not for years. Supermarkets use beef to generate footfall. There's no one making a fortune at the poor farmers expense.



Are you sure?


----------



## Purple (19 Aug 2019)

Protocol said:


> Are you sure?


According to the farming correspondent from the Irish Independent during an interview on the radio.


----------



## Purple (19 Aug 2019)

Protocol said:


> Goodman made 170m profit.


His group is one of the largest meat processors in Europe and have interests in many other businesses including the Blackrock Clinic, other private hospitals and properties.


----------



## galway_blow_in (19 Aug 2019)

johnwilliams said:


> bit puzzled  farmers states they are losing money on beef ,this has been going on for years so why do they still do beef ,most companies would have given up and moved onto something else ,what does their  bank managers think of this ,surely they would advise them to try something else?



Very fair question, farmers are a curious bunch 

Often hear a farmer say that if the EU removed subsidies," beef would soar in price over night" 

A case of presuming that a sharp rise in beef would be a foregone conclusion to the removal of supports, entirely flawed reasoning of course as subsidies are a political instrument rather than anything else


----------



## rob oyle (19 Aug 2019)

johnwilliams said:


> bit puzzled  farmers states they are losing money on beef ,this has been going on for years so why do they still do beef ,most companies would have given up and moved onto something else ,what does their  bank managers think of this ,surely they would advise them to try something else?


In short - under subventions from the taxpayers via CAP, farmers make an income, that's why they do it. The farm itself doesn't even wash its face (is a loss making operation before the subsidy). The farmers have become dependant on these payments so continue doing what they are doing.
Plus the lobby groups/corporate interests keep telling farmers that we are somehow unique in growing grass and feeding cattle that way (whereas the truth is we need massive feed and chemical fertiliser imports to maintain cattle numbers).


----------



## Purple (19 Aug 2019)

rob oyle said:


> In short - under subventions from the taxpayers via CAP, farmers make an income, that's why they do it.


Call it what it is; welfare payments, handouts. Farming is like a massive FAS course supported by the German taxpayer. On a FAS course you can keep and sell the chair you reupholstered. The Farmers can keep or sell the animals or plants they grow but in reality they get their income from their fellow citizens via handouts.


----------



## rob oyle (20 Aug 2019)

Purple said:


> Call it what it is; welfare payments, handouts. Farming is like a massive FAS course supported by the German taxpayer. On a FAS course you can keep and sell the chair you reupholstered. The Farmers can keep or sell the animals or plants they grow but in reality they get their income from their fellow citizens via handouts.


+1








						Crazy maths makes nonsense of Irish climate change policy
					

Subsidy on peat generation exceeds wages of those it employs as our emissions soar




					www.irishtimes.com
				



While the chair of the CCAC would be willing to say this about peat mining and usage, I doubt anyone in a position of influence would be willing to say the same think about 'the lifeblood of rural Ireland', regardless of the evidence available to them.


----------

