Any hopes on the part of the agri-food industry that the horse meat in burgers story would quietly go away were dashed this week as the ABP-owned Silvercrest Foods plant lost several major contracts.
It must now be bracing itself for legal actions, starting with Tesco, which saw a reported £300 million (€360 million) wiped off its stock market value as a result of the scandal.
Silvercrest has been at the centre of investigations into how horse DNA found its way into frozen burgers. The Food Safety Authority of Ireland found it produced one burger with 29.1 per cent horse DNA relative to beef content.
Given the scale of the ABP Food Group operation, the Silvercrest plant is a minor outpost. The Larry Goodman-owned group employs 7,500 people, 3,000 of whom are based in Ireland. The beleaguered Silvercrest plant employs 112 people in Ballybay, Co Monaghan.
ABP Beef is Europe’s largest privately owned beef processor and the company processes more than one million cattle each year from farmers in Ireland, the UK and Poland. Silvercrest Foods accounts for 2 per cent of total ABP turnover, which is estimated to be about €2.2 billion.
The cost of this week’s lost contracts is not clear, but the Burger King and Tesco contracts alone were worth about €45 million. Add in the contracts from Aldi and The Co-operative Group and industry sources estimate the plant may have lost up to three-quarters of its business.
Silvercrest also made burgers for Dunnes Stores but the company has remained silent about its contract with the plant.
While Silvercrest is a small cog in the giant ABP wheel, it still produces about 200 million burgers a year. But frozen burgers are a small part of the State’s beef trade.
We exported €1.9 billion worth of beef last year. In 2011 exports of frozen beef burgers and other uncooked processed beef were valued at €170 million, according to Bord Bia. The UK accounted for 80 per cent of these exports.
None of this makes Bord Bia’s job any easier in promoting Irish beef abroad. However, its survey of shoppers in Manchester and London found that people were still positive about Irish food standards.
“Some consumers raised concerns over why UK authorities had not discovered the issue. Overall, many consumers felt the matter undermined confidence in the industry, particularly in terms of trusting labels and value brands,” a Bord Bia spokeswoman says.
On the positive side, following a Tesco investigation, ABP Group has retained its €100 million fresh beef contract with the retail giant. This supports its claim that the practices in Silvercrest were not replicated across the rest of the business.
Unwelcome publicity
All this publicity must have been as welcome as a hole in the head to the media-shy Larry Goodman. To the general public, his name is synonymous with the Beef Tribunal, which uncovered irregularities in his business and cost taxpayers millions. Some people were surprised to learn he was still in the beef trade, let alone running a business with a turnover of more than €2 billion.
“Larry Goodman is not the big bad wolf that some people like to portray him as,” says one source. “He has built up a long-standing reputation with retailers in the UK and has maintained it through being dependable. Tesco needs him as much as he needs them.”
He also has a good track record with farmers. “They might argue on price but he always pays on time.”
Key issues
Almost three weeks after the burger story emerged, his company still has not answered key questions. Why did Silvercrest source the beef product in Poland? By doing this, it was flouting its agreement with Tesco that meat in its products must come from a list of approved suppliers.
Did it think this would never come to light during the various audits by Tesco? It had been using the Polish product for up to a year without alarm bells ringing, according to Minister for Agriculture Simon Coveney.
While details of the agreement between Tesco and Silvercrest are not known, it’s likely that the retailer only audited Silvercrest, and not Silvercrest’s suppliers.
The plant was audited to British Retail Consortium standards, which are higher standards than EU food regulations, yet that did not prevent this incident.
Silvercrest says it had used the imported beef product because it was not available here. Given that Ireland is the largest net exporter of beef in the northern hemisphere, it seems strange that any beef product would have to be sourced abroad, unless it was purely a matter of cost.
ABP’s website describes Silvercrest as “the lowest cost producer of frozen meat products in the British Isles, thanks to our state of the art facilities, large-scale operations and many years of experience in quality processing”.
Did Tesco never wonder how Silvercrest could produce eight burgers for not much more than a euro? Tesco’s decision to introduce DNA testing across its meat products will probably be copied by many other supermarket chains, and while it says it will bear the cost, farmers and consumer groups believe they will ultimately end up paying.
And when the legal writs start flying over the millions of euro of lost trade, who will ultimately pick up the tab?
