Farm Ireland
Independent.ie

Monday 5 December 2016

Review of factory's beef grid shows it has cost farmers €78m

QPS will never be 'cash neutral' for beef producers, says report

Martin Ryan

Published 25/10/2016 | 09:30

Calculations from ICMSA show that the penalties outweighed the bonuses to the tune of between €12.9m and €18.7m per annum.
Calculations from ICMSA show that the penalties outweighed the bonuses to the tune of between €12.9m and €18.7m per annum.

A review of the beef factories' grid payment system has revealed that it has cost farmers over €78m since its introduction five years ago.

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The report, commissioned by the ICMSA, concludes that the formula of the Quality Payment System (QPS) will never deliver on the commitment of a 'cash neutral' outcome for producers, leading to the ICMSA president, John Comer, to call for an immediate review.

Calculations based on Department of Agriculture data from the country's beef export factories for both steers and heifers, with weights and individual grades across the entire range for the last five years, show that the penalties outweighed the bonuses to the tune of between €12.9m and €18.7m per annum.

Mr Comer said that the QPS was "not working in the best interests of Irish farmers" and that "the meat plants continue to ignore the widespread mistrust, lack of confidence and ongoing resentment around the grid".

"Those who championed this disaster of a grid must now concede that they were wrong and join us in demanding an immediate and thorough review that was promised two years ago by the Beef Forum. I challenge anyone to look at the data and come to any other conclusion," said the ICMSA President.

Analysis

A spokesman for MII said that "the QPS has been a positive development for the entire beef sector and continues to fulfil its role in terms of market ­signalling and rewarding quality. We have not seen this particular ICMSA analysis but would find its reported conclusions very questionable".

"The QPS was introduced on a cost-neutral basis. Since then, the proportion of U grades for both steers and heifers has increased significantly while the share of O grades has fallen. It should also be noted that the overall price paid for finished cattle increased year on year throughout the period 2009-2015, with the exception of 2014, so that the annual steer price for 2015 was almost 40pc higher than in 2009," the statement added.

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"The QPS rewards farmers based on the quality of cattle, which is no different than for milk or grain purchased by processors or indeed to the price differentiating that farmers undertake themselves around the sales ring. Presumably the ICMSA does not favour a return to flat-rate pricing across all commodities."

The QPS was introduced in December 2009 and the following January, IFA President John Bryan told angry farmers: "I had nothing to do with the introduction of the grid because I was canvassing in the election at the time it was brought in, but I know that the intention was that it would be cash neutral for producers. From the anger on the ground it is obvious that there are problems".

Mr Bryan could not be contacted over the weekend.

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