ICSA reminds all farmers: Farm safely this Christmas

20th December, 2013

Irish Cattle and Sheep Farmers’ Association president Gabriel Gilmartin is reminding all farm families to farm safely this Christmas.

“With bad weather forecasts and dark evenings ahead, I want to remind all farmers to ensure that safety is at the forefront of their minds over the Christmas period. This is the time of year when families gather together and it is especially important to make visiting family members aware of potential farm dangers.”

“I want to wish all farm families a safe and happy Christmas.”

Widespread anger over bull beef crisis

20th December, 2013

The Irish Cattle and Sheep Farmers’ Association says farmers are extremely angry with meat factories, who have all but shut down the trade for young bulls.

ICSA beef chair Edmond Phelan said the situation is reaching crisis point. “It’s not just a case of getting dismal prices for these animals – some factories are refusing to kill them. They’re overhanging the entre trade as a result and dragging down prices for all animals. It’s crippling finishers who have specialised in young bulls and the anger is palpable.”

He said the factories are rowing back on commitments they made two years ago, when they actively encouraged finishers to fatten bulls, particularly dairy bulls. “We were told by the beef barons that there would be a strong trade for these animals – a decent margin and plenty of demand. But they have changed their tune completely and are now leaving farmers who switched their focus to bulls high and dry.”

Mr Phelan also slammed the 16 month age limit as being totally unworkable in an Irish context. “With grass-based feeding systems and the high cost of concentrates it is simply uneconomical to finish bulls at 16 months – Teagasc research backs this up. It’s high time the factories stopped messing around with arbitrary, unrealistic and unworkable age limits.”

The consequences for the beef and suckler industries could be dire, he warned. “If this situation is left unchecked, it will do more harm than any scheme or subsidy could ever hope to remedy. Beef and suckler farmers will abandon the sector and switch to dairying or even contract rearing in the hopes of making a decent living. We could end up like New Zealand, where the bull calves are shot. How the factories cannot see the damage they are doing is beyond me. Where do they think they’ll get their animals from when the industry grinds to a halt?”

“The factories need to seriously re-think their strategy and the way they treat their suppliers if the industry is going to survive, let alone hit expansion targets. The Minister must also recognise the danger and act very quickly to avert a crisis. If he fails to tackle this disastrous situation, Food Harvest 2020 will be dead in the water as regards beef – instead of a 40 per cent increase, we’ll see a 40 per cent decrease, if not more.”

ICSA president sends warning to Minister on co-funding

16th December, 2013

Irish Cattle and Sheep Farmers’ Association president Gabriel Gilmartin has warned the Minister for Agriculture on the need to secure 50/50 co-funding for the Rural Development Programme.

Mr Gilmartin said the Minister must ensure that he fights for full co-funding of vital Pillar 2 schemes as a priority. “It would be unconscionable for Minister Coveney to accept anything less than 50/50 co-funding for rural development. He must ensure that the Department of Public Expenditure is fully aware of the value and necessity of maximising the allocation for the Pillar 2 schemes.”

A decision on the level of Exchequer funding to be made available for the Rural Development Programme (RDP) is due this week. Mr Gilmartin had harsh criticism for recent suggestions by Minister Coveney that the decision could be based on the €405 million allocated for the RDP this year. “It is misleading for the Minister to refer to this year’s allocation as an acceptable reference point for future funding levels. The 2013 figure is an extraordinarily low baseline and reflects the fact that we have been operating under an EU/IMF programme for the past number of years. However, post-Troika, we need a more ambitious RDP reflecting the Government’s positive soundings on exiting the bailout.”

“The Minister knows well that any cuts to Pillar 2 funding would hit low-income farming families the hardest. These farms have already seen their small incomes reduced through cuts to vital schemes like the Disadvantaged Area Scheme and REPS, with AEOS a mere shadow of the original REPS and no agri-environment scheme at all open for 2014 entrants.”

“Minister Coveney would be making a serious error if he accepts anything less than full co-funding,” Mr Gilmartin concluded.

Patrick Kent elected ICSA president

12th December 2013

Wexford farmer Patrick Kent has been elected president of the Irish Cattle and Sheep Farmers’ Association after the vote in Portlaoise, defeating Gabriel Gilmartin of Sligo in a keenly contested election.

In his acceptance speech, Mr Kent said he was honoured to have been elected and said he aimed to use his presidency to empower the organisation further and represent ICSA members as strongly as possible.

Mr Kent, a cattle and sheep farmer from New Ross, said his main priorities include tackling the issue of low farming incomes and the sustainability of small family farms. “I’m very proud to represent a sector of farming that is producing food of a quality that is unsurpassable; wholesome, nutritious food unlike the empty-caloried junkfood that’s taking up so much space on retailers’ shelves. Cheap, processed food has a high health cost and we must ensure that the benefits of our quality beef and lamb are promoted here at home and abroad.”

The challenges facing the suckler industry are also a concern for the Wexford man. “The high cost of producing a weanling is leaving a very small margin for suckler farmers. We need to see a dramatic increase in the prices gained for quality weanlings and a corresponding fall in the cost of inputs. Otherwise, the targets set out under Food Harvest 2020 will have to be seriously revised. The current issues surrounding the price of bull beef also need to be tackled.”

“It will also be vital that we push hard for 50/50 co-funding for the Rural Development Programme under Pillar 2. Many farmers absolutely depend on these schemes for a vital part of their incomes and the programme must be funded to the fullest extent.”

Mr Kent will take up the reins at the ICSA AGM and Annual Conference on January 30th.

ICSA comment on Teagasc Outlook 2014 projections

10th December, 2013

The Irish Cattle and Sheep Farmers’ Association has sounded note of caution on the optimistic outlook for farming in 2014 presented by Teagasc today.

Speaking after the conference in Dublin, ICSA president Gabriel Gilmartin welcomed the positive projections, but said the longer-term effects of this year’s fodder crisis are yet to be understood. “While Teagasc are forecasting that lower input costs next year will drive an increase in gross margins across all systems, I am concerned that the impact of the fodder crisis will continue to unfold in 2014 and that the problems will be particularly acute on the low-margin enterprises such as suckling.”

“Many of these farms had to take extreme measures to get through the early part of this year, including reducing stock numbers and increasing borrowings. If you had to sell off cows to cope with fodder shortage, then your output will be lower in the years ahead. This will obviously have a negative impact on family farm income figures next year.”

ICSA comment on re-opening of Japanese market for Irish beef

2nd December, 2013

The Irish Cattle and Sheep Farmers’ Association has said that while the re-opening of the Japanese market for Irish beef is positive, it remains to be seen how much it impacts beef prices in the long run.

ICSA president Gabriel Gilmartin said, “While additional revenue of up to €15 million for the Irish beef industry is a very welcome development, it is not enough to make a significant impact on beef prices in the coming months. However, it sends out a very positive signal on the quality of Irish beef and the meat industry must build on this to deliver better prices.”

Mr Gilmartin commended An Taoiseach and the Minister for Agriculture on their efforts in securing the agreement with the Japanese government.

Crisis of confidence emerging in beef sector

2nd December, 2013

ICSA beef chairman Edmond Phelan has said that there is an emerging crisis of confidence in the beef sector, particularly linked to the increasing difficulty in getting young bulls slaughtered.

“The focus of the anger is not just about the fact that beef price is showing no signs of improvement, it is about the apparent lack of interest in cattle. Finishers who have specialised in young bulls are getting the signal that they are not wanted but this poses a real problem for quality cattle coming from the suckler herd.”

“The meat industry has been messing around for a while now saying that they want young bulls slaughtered at under 16 months. The reality is that heavy continental weanlings cannot be economically finished at that age given the cost of feed inputs on Irish farms and allowing for the fact that our strength is growing grass. Teagasc research confirms that 16 month bull beef is not economical. Farmers with bulls are discovering that there is just no point in buying them if there is this ongoing doubt about what is wanted. What is really frustrating is that factories forget all this as soon as beef gets scarce.”

“Irish finishers are vitally important to the suckler herd especially as the export of weanlings has slipped in the past two years and the signs are not that positive for 2014. However, finishers are getting very pessimistic about what to buy given the unrealistic talk of 16 month bull beef, coupled with ongoing frustration over the completely arbitrary 30 month limit for steers and heifers.”

“We are now into the high cost winter finishing period and farmers need a price rise now for shed cattle. Traditionally, cattle price strengthened coming up to Christmas and into the New Year as cattle got scarce and demand was steady. With no signs of this happening, there is now a real crisis of confidence and it makes any talk of increased output under Food Harvest 2020 look very foolish.”

ICSA: Pillar II must be co-funded to maximum extent

28th November, 2013

President of the Irish Cattle and Sheep Farmers’ Association, Gabriel Gilmartin, has underlined the absolute necessity of ensuring that the Rural Development Programme (RDP) is co-funded to the maximum extent by the Government.

“Pillar II must be co-funded to the tune of 50 per cent. I would be extremely concerned at any suggestion that co-funding from the Irish exchequer would fall short of that level,” Mr Gilmartin said.

“Furthermore, it is misleading for the Minister to refer to the total allocation for this year’s RDP, which amounts to €405 million. This is an extraordinarily low base and should not be used as a basis for negotiating the RDP budget for the next seven years.”

“Limiting State support for the RDP would hit the lowest income farms, all of whom have already seen their incomes reduced through severe cuts to schemes such as the Disadvantaged Area Scheme and REPS, with AEOS a mere shadow of the original REPS scheme and no agri-environment scheme at all open for entrants in 2014.”

“Not only do these schemes form a core part of incomes on the most marginal farmland in the country but maximising the funding for them is also critical to ensuring the objectives of the schemes are delivered upon. The onus is now on Minister Coveney to ensure that the Department of Public Expenditure and Reform sees the necessity and value of securing 50 per cent co-funding for these vital schemes.”

Speech by ICSA president Gabriel Gilmartin to the Joint Oireachtas Committee on Agriculture

Speech by ICSA president Gabriel Gilmartin to the Joint Oireachtas Committee on Agriculture, Food and the Marine on the closure of TLT International

21st November, 2013

Thank you, chairman, for the opportunity to contribute to this important debate on TLT.

Our first concern is the immediate difficulties faced by farmers and marts who are owed money. For a farmer, the exposure is hugely traumatic. Clearly, this is also a time of great stress to mart managers and committees.

However, the early indications are that the bulk of the debt is owed to marts. While there is a lot of speculation about the scale of the money owed to individual marts, a lot of the talk has been based on wild guesses.

The hope is that marts that have been run profitably for a number of years should have the financial resources to survive this and to ensure that it is business as usual. Assuming, of course, that they have been diligent in managing their credit levels and in pursuing monies owed on a weekly basis.

Obviously we have to be careful not to hype up the exposure of marts, or worse still speculate on the position of individual marts. Confidence in the mart system is as vital to the livestock trade as confidence in the financial system is to the economy.

It is important to emphasise that marts affected by the TLT issue continue to trade. While there was an obvious concern when the story broke, farmers continue to bring stock to marts and in the past few weeks it has been business as usual.

The fact that marts are paying their clients promptly as per usual will be reassuring. Some of the marts involved have issued statements which confirm that reserves are in place and that is an important step in rebuilding confidence.

On the other hand, demands that the marts should declare exactly how much they are owed in public is entirely premature. Mart committees need to tread very carefully in any public statements that they make.

A blanket statement by a mart saying that it is owed X thousand euro is meaningless, unless set in the context of the mart’s overall financial position. The overall financial position of a mart is best understood when the auditors lay the full accounts in front of the mart AGM. A loss of €50,000 could have an entirely different context in two marts depending on the underlying viability of their respective business models.

In due course, each mart will be accountable to its shareholders at its AGM, but in the short term, the interests of the shareholders are best served by ensuring that mart managers and their committees take steps to ensure that confidence in the mart is maintained while ensuring that suppliers of livestock are paid promptly as usual.

The immediate worry is how the marts and farmers are going to get what they are owed. The problem is that the receiver has been appointed by the bank and he will follow the regulations which set out that the receiver is paid first, the banks second, the taxman third and then everybody else.

There will be lingering doubts about whether HSBC made its biggest mistake in advancing the credit in the first place or whether the decision to appoint a receiver was too hasty and not well thought out.

There is certainly an argument that the best way to ensure a maximum return to all creditors would have involved an examinership or a more gradual wind-down of the credit facilities rather than the receivership which has wiped out TLT without any great hope that all monies owed can be recouped.

In the broader scheme of things, the question that exercises most thought is what the impact on live exports and the cattle trade in general will be. I would like to say that I am concerned that the impact of the TLT closure is being understated, particularly in political circles. Granted, there is reason to be hopeful that the demand for livestock around Europe and North Africa will remain constant and the slack will be taken up by other Irish exporters.

However, it would be naïve to think that this will happen easily. For one thing, the directors of TLT had built up a base of customers over many years and there is no obvious reason to think that these relationships can be readily taken over by another Irish exporter. Their influence on the Italian market has been of particular interest to the suckler farmers who have bred top of the range weanlings.

Moreover, the harsh fact is that the credit terms required by continental buyers aren’t going to soften just because of the TLT experience. What we do know is that the credit level of some €3 million that was available to TLT from HSBC bank is now off the table and marts apparently have an exposure that could run as high as €3 million also. That’s €6 million that will have to be found elsewhere.

Regardless of the marts’ exposure they are all likely to take a much more cautious line for the foreseeable future. The consequence is that either we develop an export trade based on payment up front or we find a better way of financing the sector. Neither option looks simple.

I have heard it said that TLT deserved to go under because they paid up to €50 too much on average. But if the trade to Italy is undermined, how much will top grade weanlings fall in 2014? The progressive suckler farmer breeding top U grade weanlings has no scope to take lower prices.

Farmers will be concerned also that any reduction in live exports will be a silver lining for the meat factories. Recent years have demonstrated that beef price and levels of live exports are inextricably linked.

A higher level of dairy calf exports in 2013 has been welcome after they collapsed in 2012. There has also been positive reaction from farmers to new live cattle export markets out of Europe to places such as Libya and Tunisia, some of which involved TLT. All of this ensured that cattle were scarcer for the meat industry here and scarcity equals firmer price.

It must also be remembered that TLT were involved in live sheep exports and again, the concern is that less live exports means lower factory prices for sheep farmers.

In reality it will really be this time next year before an accurate assessment can be made. Fortunately, Irish beef finishers have been strong customers for weanlings in recent weeks. However, the key for any mart and for the wider sector is to ensure that there is a strong trade over the full twelve months.

I want to emphasise that the whole episode is a huge wake-up call to us all. ICSA believes very firmly that unless there is competition on some sort of an equal footing between live exports and the meat factories, the future for sucklers in particular is very bleak.

It seems absurd that a deficiency of perhaps €6 million could completely undermine the potential for expansion as set out in Food Harvest 2020. But that’s the reality. It’s not all that long ago when a key player in the Irish meat processing sector got into difficulty with exports. It’s worth reminding ourselves that the Government at the time seemed to believe that, regardless of the cost, the export of beef had to be supported.

The question we now face is whether the Government of today understands and is committed to the importance of live exports. I’m not suggesting that TLT should be bailed out. But we must now examine what needs to be done to support the rest of the live export sector, the marts and the farmers who produce export grade weanlings. We also need to be concerned that a significant reduction in live exports could impact on the shipping service provided by Celtic Link.

In the final analysis, the overall debacle again raises the question of the availability of credit to the livestock business. Just as cattle and sheep farmers have found credit being squeezed by banks, TLT discovered that the banking sector seems to be intent on continuing to reduce its exposure to the sector.

It is also time to consider whether there is a different model that can be developed to support live exports. One which doesn’t depend on a small number of essentially small limited companies taking risks to drive the business.

Is there a role for export credit insurance? How would this be funded, especially given state aid rules? Is there a role for a co-operative structure? Can we deal with the financing required and what are the credit options that don’t leave marts or farmers exposed?

It’s easy now to pontificate about the risks that marts take in extending credit. But in the real world, credit is an integral part of most commerce across Europe, and in fact the EU Commission has been to the fore in pushing for credit terms of 30 days.

In reality, marts were playing a crucial role in supporting a policy in favour of live exports that has been enthusiastically backed by farm organisations, politicians and farmers. In most cases, marts did not provide extended credit facilities to any individual company, but are simply caught by the fact that one good sale involving as little as 7 days credit can involve tens of thousands of euros.

At this point, I would suggest that the Minister for Agriculture needs to realise that the future of live exports is now an urgent issue and at a minimum, it needs to be treated in the same way as the closure of a large scale employer. A task force to examine the way forward for live exports might be a first step.

Knock on effects from TLT still to emerge

18th November, 2013

Irish Cattle and Sheep Farmers’ Association (ICSA) president Gabriel Gilmartin has said that there will be knock on repercussions for the live trade from the appointment of a receiver to TLT International. “Unless there are other exporters to fill the gap, there must be concern that there could be a reduction in the frequency of shipping. Certainly the loss of any significant live export customer will be unwelcome for the current operator of the main shipping route from Rosslare.”

Mr Gilmartin also expressed concern that the Italian trade was a vital outlet for top of the range U+ type weanlings and that suckler farmers who have targeted this market will be concerned about who will buy these weanlings in 2014. “Farmers are currently calving cows where the offspring are ideally suited to the export market. Their system of farming is certainly at risk unless other exporters can take up the slack. However, the question then arises as to who will fund this, given that HSBC are effectively withdrawing their credit facilities from the live export trade.”