22 October 2007
The Northern Ireland Red Meat Task Force Report has concluded that fundamental changes are needed at all levels of the supply and production chain to return the industry to profitability. With the support of the international strategic consultancy organisation McKinsey & Company, the Task Force report which is published today (Wednesday 3 October 2007) identifies that producers are losing approximately £180 million pounds per year excluding interest and depreciation costs. The processing and retailing sectors are profitable with a combined profit of approximately £40 million pounds per year.
The Task Force has sought to find solutions within the chain of production and supply but even with the most aggressive cost efficiency savings they could not find economically viable solutions for suckler beef and hill sheep production at current market prices. For suckler beef producers a market price of £3.20 per kilogram is needed to give a proper economic return for all of the fixed and variable costs of production even after stretching targets for efficiency savings are implemented. For hill sheep production a market price of £3.35 per kilogram is needed to achieve viability with similarly stretching efficiency targets.
Beef produced from animals originating in the dairy herd are closer to economic viability. At a price of £2.20 per kilogram, which is close to the current GB price, producers operating at a suitable scale and a high level of efficiency can be viable. Upland/lowland sheep meat production is viable, for farmers operating a scale of 600 ewes, at current market prices.
Speaking on behalf of the Task Force Owen Brennan Task Force Chairman says “This Task Force report is just the beginning. There is a lot of work to be done across the whole industry. The first step is to present the report to both the industry stakeholders and the customer base and seek a positive response on market prices. Government should lead the way and initiate the trials and development work necessary to demonstrate the viability of the recommended options within Northern Ireland.”
Commenting on the report, Minister Gildernew said: “Today’s report comes at a critical juncture for our red meat industry which, like other sections of our agriculture and rural economy, is facing real challenges. The situation is serious. We must take stock collectively to consider the recommendations and the way forward and my department is ready to work through this with other key stakeholders.”
Kenneth Sharkey, President of Ulster Farmer Union, said “This report effectively sets out quantively what farmers have already known – that beef production and sheep meat production has not been profitable for producers. The detailed analyses within the report will be extremely valuable for every farmer as he examines his options for the future. It is clear from this work that if there is not a substantial improvement in the market price then farmers should not continue to spend their single farm payment and other income on unprofitable beef and sheep meat production. I strongly encourage farmers to examine the report in detail in advance of making decisions about their future farming plans.”
Campbell Tweedie President of NIMEA said “We are pleased that the facts in regard to industry profitability are now independently assessed and authortively set out in the report. This report will be immensely valuable to processors in approaching their customer base in an effort to obtain a more realistic price that can be passed on to producers. Processors will work with the broad industry interests to implement the recommendations.”
An Executive Summary is being widely distributed immediately following the Task Force Conference and the summary report and full report are available to download from the Task Force website www.niredmeattaskforce.co.uk .
Ends
For media information contact Maria McLaughlin Tel: 028 9263 3016 or email mmclaughlin@lmcni.com
Notes to Editors
The Northern Ireland Red Meat Task Force was established in 2006 in the wake of the decoupling of subsidies. The Red Meat Task Force is made up of representation from across the industry – Ulster Farmers Union, National Beef Association, DARD, Livestock and Meat Commission for Northern Ireland, Northern Ireland Meat Exporters Association and Invest NI.
The Red Meat Task Force undertook to create a strategy for the industry covering the next 5-10 years.
