Another roadblock in cattle tag approval means Cormac Tagging still can’t sell their tags despite their initial approval this week and has raised serious questions around the implementation of competition law regarding the cattle tagging contract.
As reported yesterday the Department of Agriculture has approved Cormac Tagging to supply the cattle tag market however it will still not be able to sell its tags until there is a further sign off of its IT system which could take another 2 weeks.
‘It’s keeping us out of the market for another couple of weeks’ said Ursula Kelly of Cormac Tagging.
‘There’s 30% of the tags ordered in November at 30,000 tags a day.’
‘We would have no problem with waiting if this happened in July but its November the busiest time of the year.’
‘But why do it in the busiest month of the year?’ questioned Ursula.
When asked why it would take 2 weeks to have the IT system signed off Ursula doesn’t know. ‘IT people from the department have already arrived on a previous occasion and seen it.’
‘We have a huge waiting list for tags but clients can’t order them, our plan in house is to take all the details and do some promotion until such time as we get the full approval. We can’t sell people the tags still, I don’t want it to be drawn out any longer.’
The approved contract is for conventional, tissue, electronic and replacements tags for cattle. Its contract is for one year. The firm is pricing its standard tag set of one conventional and one tissue tag at €2.68, including VAT and including the 38c contribution to the ICBF. Their tag will be cheaper than approved supplier Eurotag.
The cattle tagging business is worth 18 to 20 million euro every three years. Until this year only one company has won the contract for cattle tags in Ireland; Mullinahone Co-op. Mullinahone's Eurotag division is run by former IFA county chairman Liam Egan.
Its understood the IFA and are in favour of just one supplier while Macra have cautiously welcomed another supplier. Pat McCormack deputy president of the ICMSA said ‘they welcomed the approval of the second supplier but we cautioned that the suppliers had an obligation to supply tags at a competitive and fair price.’
However the tags as previously indicated are only supplied by one supplier who have until now set the price.
The President of the ICSA Patrick Kent has called the one supplier position 'a monopoly' and said “I am calling on other farm leaders to explain why they were so opposed to competition for tags – a position which defied basic economic principles.”
However, the Department believes that a single supplier is the best way of supplying tags at a competitive price.
Jonathan Hoare special advisor to the Minister for Agriculture, Michael Creed told That’s Farming that Cormac Tagging only applied in October and Eurotags Mullinahone Co-op had applied to the tender process in September and that Eurotags was approved before Cormac Tagging because they had applied first.
When asked why the approvals were not given at the same time thereby creating a fairer competition market place Hoare replied that it was down to the different times the tenders were put in and that there was a process.
‘We needed tags to be available on November 1st. Those that submitted late weren’t in a position to be approved by November 1st.’
‘The tags have to be approved by an independent department, we have a higher standard than the European standard.’
The caisley tag which Cormac tagging propose to use is used throughout 27 European nations already including Northern Ireland and England and has passed all required checklists in those countries.
AllFlex a French company currently supply 100 percent of the tags used in Ireland. All those tags are sold by Mullinahone Co-op operating under the Eurotag brand.
Seamus Maye of the International Small Business Alliance who specialises in competition law believes that the situation is; ‘outrageous…it’s a small company being battered with red tape, in my view its disgraceful behaviour on behalf of the department.’
Maye has questioned the fairness of the tender process which would allow for the approval of one competitor before another;
‘In my view and not having seen the tender documents I believe the department are duty bound to have all their boxes ticked so that the new supplier could come into the market on November 1st. This delay [by 9 days and counting] to me is nothing other than an artificial barrier to entry created by the department and whilst it may not be technically in breach of competition law, it most certainly breaches the spirit of competition law and the company Cormac Tagging could well be entitled to damages having regard that peak demand starts on the first of November.’
This is not the first time that the department of Agriculture approval of tagging has been drawn into question. The 5 million a year contract was questioned by TJ Gormley of Cormac Tagging in 2008.
Mr Gormley claimed then that the department had refused an independent assessment of the various tags which had been put forward by companies for the contract.
That it could take the department 9 days to assess whether Cormac Tagging’s caisley tag were tamper-proof and are not re-usable by a panel of independent experts raises serious questions, when the tags are already approved in 27 European countries.
That it could take nearly 2 weeks to see if Cormac Tagging's IT system works despite the commpany already having deomstrated that it can by virtue of its 30% share in the sheep tag market raises questions.
That major farm groups could support only one tag supplier on the grounds that it ensured tags were supplied at the best possible price raises also further questions.
Éamon Ó Cuív of Fianna Fail told Thats Farming that;
‘Its an utter disgrace I have never seen such obstructionism overall in relation to dealing with an issue.
‘It’s a good few months now since the department had to admit that the decision of one supplier had no legal basis and it seems since then there has been one delay and difficulty placed before the competition after another and that every effort has been made to make it very difficult to allow a second supplier to get into the market.’
When asked if the Department were in breach of competition law, the TD said; ‘I would believe if a person had they resources they would have a very strong case.’
John Connell, with additional reporting by Shane Ganley.