The Minister for Agriculture and Food warned the beef industry that it should not sacrifice quality for quantity when he officially opened the National Open Beef Day in Grange, Co Meath.
Mr Walsh said it was clear in the long run that the most profitable beef enterprises were those producing quality products.
"I think that over the past 10 years the Irish beef industry could justifiably be criticised for having sacrificed quality in favour of quantity," he said.
Mr Walsh said that while we had allowed cattle numbers to build up to record levels, the huge increase in numbers had been accompanied by a marked deterioration in the grades of beef cattle as measured against the EUROP grid.
"I am not saying that Irish beef is of inferior quality in terms of food safety or eatability, what I am saying is that the majority of Irish cattle do not meet the requirements of premium customers," he said.
He said farmers should refocus their efforts on the premium EU markets because Third World markets would be vulnerable to cuts in export refunds and farmers would need to face the enlargement of the EU and the threat from Polish, Czech and Hungarian beef-producers.
The Fine Gael leader, Mr John Bruton, who visited the event, criticised the Minister and the industry for not properly compensating farmers for producing quality animals. If quality was rewarded, he said, it would go a long way towards improving the quality of animals.
Mr Tom Parlon, president of the Irish Farmers' Association, said integrated beef production groups were the way forward for the beef sector. This, he said, would involve producers, processors and retailers working together to reduce dependence on vulnerable third-country markets and increase the State's share of higher-priced EU retail markets.
The challenge for the sector, he said, was to close the 20 per cent price gap which had opened up between Irish and European livestock prices.
Mr Pat O'Rourke, president of the Irish Creamery Milk Suppliers' Association, congratulated Teagasc, the agriculture and food development authority, for its on-farm programmes which showed farmers how to cuts costs.
But he warned this could be offset by the imposition by the Department of Agriculture of unnecessary costs associated with rules and regulations.
One of the central messages delivered was that a production blueprint developed by Teagasc could deliver farm incomes of over £200 per acre, ensuring that farmers with medium-sized holdings could, over the next decade, make an income equivalent to, or better than, the average industrial wage.