29 September 2000

Eire meat trade cleared of collusion allegations

By Philip Clarke

IRISH meat traders have been cleared of all allegations of price collusion, to the surprise and consternation of the Irish Farmers Association.

An investigation was launched by government in January of this year, following a farmer blockade of the meat factories, to examine claims of anti-competitive practice in the beef industry.

At the time, farmers were bemoaning the fact their prices were among the lowest in Europe, while the trade had unfairly raised its meat inspection levy.

The investigation report was published in Dublin at the end of last week, (four months late), and concluded there was "no evidence of anti-competitive behaviour either in the form of cattle prices or in profits". It went on to suggest that the whole industry suffered from low profits.

This was described as "incredible" by IFA president Tom Parlon. "The report finds that factories all paid the same price for cattle, but amazingly concludes that this is not anti-competitive practice."

Mr Parlon said the meat trade cartel was only broken up by the farmers blockade. Since then, Irish cattle prices had increased from 80% of the EU average to 93%, "concrete proof of the cartels stranglehold on Irish prices last autumn".

The report also fails to address the collusion of the meat plants in imposing across-the-board, higher meat inspection levies of Ir£5.50 per animal, he added.

One aspect the investigation does comment on is the difference between farm-gate and shop prices. But again it comes down in favour of the trade, dismissing suggestions that retailers fail to pass on movements in their raw material costs.

"These allegations are based on simple price comparisons," the report says. "They totally ignore cost developments in the post farm-gate sectors, which account for half the value of the total chain. There is no scope for manipulation of prices by wholesalers and retailers."

Meat traders have welcomed the findings, which include recommendations for an annual study of the health of the Irish food industry and a call for better meat inspections.

They also say that since the dispute ended last January the department of agriculture has published weekly average prices from each abattoir to ensure complete transparency.

The fact prices have increased since then simply reflects the firming of Third world markets and the stronger US$, said Irish Meat Association chief executive John Smith. It did not suggest any collusion on prices before the dispute.

"The report also provides a comprehensive and objective analysis of the real problems facing the sector," he added. These included the growth in live cattle exports from Ireland to feedlots in Spain and Italy, and the continuing over-capacity in the processing sector.

Rising wage costs stemming from full employment in the booming Irish economy are another concern.