Farmers are ‘justifiably concerned‘ following the news of Dawn Meats proposed takeover of Dunbia, according to the Irish Creamery and Milk Suppliers Association (ICMSA).
There is a worry that the ongoing concentration in the beef processing sector will translate into lower prices and further pressure on already-stressed margins, the ICMSA’s Michael Guinan said.
It is important that farmers are given assurances in relation to this critical issue, Guinan, who is the Chairperson of the ICMSA’s Livestock Committee, added.
He also called on the Minister for Agriculture, Food and Marine, Michael Creed, to ensure that farmers continue to have options when selling cattle; these options must include ‘enhanced’ live exports.
Farmers are ‘incredibly wary‘ at the present trend towards the concentration of ownership in the beef industry, Guinan said.
If the proposed deal is given the go ahead by the relevant competition authorities, Dawn Meats will have nine facilities – including five abattoirs – in the Republic of Ireland.
While most farmers were aware that businesses would have to reorganise and restructure in light of Brexit, there is a danger that such a merger could result in a narrowing of sales options for the farmers producing the beef, he said.
This deal underlines, yet again, the pressing need for a concentrated and coordinated drive on the live exports front; this would give farmers an alternative outlet for their cattle, he added.
The new joint venture will be judged on ‘future returns’
Meanwhile, news of this strategic partnership between Dunbia and Dawn Meats will not come as a surprise to most farmers, according to the Deputy President of the Ulster Farmers’ Union, Victor Chestnutt.
As part of the partnership, Dawn Meats, along with Dunbia, will establish a majority-owned joint venture in the UK; which will comprise of the UK operations of both organisations.
The combined UK businesses will trade as Dunbia. It is hoped it will deliver enhanced scale and market presence, in order to better serve existing farmer suppliers and customers of both organisations across the retail, manufacturing, wholesale and food-service sectors.
The new joint venture is set to offer customers regionally-sourced solutions for both beef and lamb, from 15 facilities across Scotland, England, Wales and Northern Ireland.
The new joint venture will be run from Dunbia’s existing headquarters in Dungannon, Co. Tyrone.
It is early days for the venture, but ultimately the news will be judged on the future returns Dunbia can generate for cattle and sheep.
“Despite the buoyant prices at the minute, profitability on beef and sheep farms remains low,” Chestnutt said.
It will be important that the company delivers on its commitment to deliver a better service for its farmer suppliers, he added.
“We believe this can be achieved through greater industry collaboration and striving towards adding more value to Northern Ireland beef and lamb.
“Dunbia has built a successful business in Northern Ireland over the years, one which farmers are very familiar with. It is positive they will remain headquartered in Dungannon,” the UFU’s Deputy President said.
