It was announced yesterday evening that Larry Goodman, the controversial owner of APB, had succeeded in his takeover of Slaney Foods. How will this affect farmers though?
It was announced yesterday evening that Larry Goodman, the controversial owner of APB, had succeeded in his takeover of Slaney Foods. However the IFA and other bodies have criticised the approval given to the move by the EU Commission, saying it would make the beef market noticeably worse for farmers.
IFA president Joe Healy claims there are “serious issues around competition around beef”, while IFA Livestock Chairman Angus Woods says farmers are losing out considerably in the sector. The Irish Competition and Consumer Protection Commission (CCPC) also got blasted, with Healy saying “they turned a blind eye to the case”.
But how will the country’s largest beef processor’s takeover of the country’s largest plant affect farmers? Not well, apparently. Woods frames the situation before this deal in stark terms:
“The reality today is farmers are selling at a loss making base price of €3.70/kg, with some factories claiming they cannot take stock for another week, at which point the price may be lower. At the same time, prices for the equivalent beef animals in our main export market in the UK are rising and making £3.64/kg, or €4.30/kg, which is €220 per head more than Irish prices,” he said.
ICSA beef chairman Edmond Phelan feels there is a contradiction at work in the EU rules. He points out that under the current regulations producers cannot control more than 15 per cent of supply, yet this takeover means APB now controls 28 per cent of the cattle supply as well as 40 per cent of the sheep supply.
He feels that this contradiction “will only add to the perception that the EU is good at regulating small enterprises but weak on big business”. What will especially sting for cattle farmers is if the above average prices Slaney have been paying to farmers end up getting reversed. This will especially hurt those with heifers and steers.
The IFA are also able to point to a report by the consultant company PMCA into how much control APB will now have of the slaughtering market. When you combine APB and Slaney, they have a combined 25.8% of all cattle slaughterings in Ireland. However it isn’t hard for the figure to rise. For example, according to the PMCA report, “when the market is narrowed down to premium cattle of steers and heifers meeting the MII grade and weight specifications, this figure rises to 36.2% of cattle”.
A minor disclaimer could be added to this report, as it was the IFA who commissioned PMCA to look at the APB/Slaney deal. There is solid data in the report however.
It identifies farmers as the “losers” in the deal, while APB/SLaney will have a sizeable market position in Wexford and south Leinster with up to 44 per cant of the cattle kill market. The report concludes that there was weak competition in the sector before this deal went through, meaning there will not only be fewer buyers for farmers but a price hike may well be be introduced down the road.
It is difficult to see what the bright spots to the deal are, though what farmers do have in their favour is they have the backing of many of the main organisations and lobby groups. It may be too late for APB and Slaney but it isn’t too late to prevent similar decisions by the EU Commission and CCPC again.