A Blueprint for Starting a Successful Beef Producer Group

A Blueprint for Starting a Successful Beef Producer Group

The beef sector in Ireland is an important part of the agriculture sector (27% of gross agricultural output, over 100,000 farmers and 10,000 jobs) and over 90 % of its output is exported. The structure at producer level is heterogeneous, fragmented and producing low or negative incomes for farmers who rely heavily on CAP payments to survive.

The Irish meat processing industry is privately owned, and is concentrated, with three companies having 60% share of cattle slaughtering. Relationships between producers and the processors are strained. This contrasts with the dairy industry which is expanding, profitable for producers, progressive and co-ops control the majority of processing, thereby giving the dairy producers direct access to market information.

Producer Groups (PGs) or Producer Organisations (POs) have been set up in many agriculture sectors and across many countries, to enable groups of producers to combine their efforts to improve their returns from the market. Some of these focus on supplying from a particular geographical area, specific breed or variety, or use a specific production method. The groups organise their production in order to meet the market capacity and avoid a glut.

There is EU legislation, since 2013, allowing groups of producers to organise themselves as POs, in a way that does not breach Competition Law. This legislation is supported by national legislation setting out the details of how this operates at member state level. There is also grant aid to encourage and support the formation of POs.

There are 3,434 recognised POs in the EU, of which 210 were in the beef and veal sector.

The study looked at a number of case studies of producer groups in the beef and sheep sectors in Ireland and four other countries, and found successful groups of farmers who combined their efforts to develop niches in the market and combine with other parts of the value chain for mutual benefit.

These groups organised themselves in a legal structure, usually as a co-op or similar structure, and had a clear governance structure which guided their operation.

The author believes that there is a good future from the formation of producer groups by farmers who are willing to work together, with a shared view of what they can commit to a processor as a group (e.g. specific breed, region, production method, and supply pattern or quality specification).

There is a need for a supporting body to provide advice and guidance to existing and prospective groups, so that they understand how to form and operate a successful group. The start-up grant for a PO should be increased from €3,000 to €10,000 to encourage their formation, and ensure that they have the expertise and technology to ensure their viability. 

The co-operative livestock marts have facilities and professional management, and are a resource which could support PGs and POs in their efforts to add value and improve producers’ viability.