Farm Ireland

Sunday 19 November 2017

Bull producers losing out on €300k a month

Martin Ryan and Darragh McCullough

QPS exclusion sees bull suppliers denied hefty bonus payments

Bull beef producers are losing out on more than €300,000 a month in bonus payments for premium quality animals because they are excluded from the Quality Payment System (QPS).

Prices compiled by the Department of Agriculture show that bull beef producers are being paid less than one third of the premium for the top U-grade animals compared to steer suppliers who are benefiting from the QPS bonus structure.

Prices being paid to producers of bull beef are now being verified on a weekly basis for the first time by the Department.

There has been a massive increase in the number of animals being finished as bulls because they are up to €10-30/hd more profitable at farm level. As a result, bull beef supplies are now running at the same level as steers. However, bulls are grading much better than steers, with 40pc of the bull intake grading U compared to just 5pc of steers.

Despite the proportion of bulls grading U being eight times higher than steers, official Department prices show that the bonus paid on U-grade steers compared to R grades is up to three times higher than the equivalent price differential paid for U and R-grade bulls.

This is because bulls remain outside the QPS. As a result, the bonus payment structure for bulls is based on the old system of U, R, O and P, with no differentiation within the individual grades. This means that the price difference between U and R-grade bulls is a straight 8c/kg. In contrast, the price difference between U and R-grade steers could vary from 10c/kg to 26c/kg, depending on whether the cattle grade R1, R2, R3 or U1, U2, U3.

The Department's data confirm these differences since the price reporting was introduced five weeks ago.

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Consequently, the difference in bonus payments between U-grade bulls and steers can vary from 2c/kg to 18c/kg. However, industry experts estimate that the average difference is likely to be around 7c/kg.

Given that the average bull carcass weighs 426kg at kill-out, a bonus of 7c/kg equates to €30/hd. With the monthly bull kill running at close to 26,000hd, the €30/hd is being lost on 40pc of this figure that grade U, or 10,000hd.

This puts the total monthly loss to bull producers at €300,000.

Bord Bia's beef manager, Mark Zieg, said that all the factories had made it clear that they would prefer fewer bulls.

"Steers are a much more flexible product. Bull beef is almost unsellable in Britain, Holland, Belgium or Germany, so you are left with only a few niche customers," Mr Zieg said.

"The factories are probably buying more bulls than they would like due to scarcity of overall supply at the moment," he added.

Bord Bia has recently received a number of complaints from foreign customers about Irish bull beef supplies, Mr Zieg claimed.

He added that steer beef had scored higher than bull beef in eating quality tests carried out by Bord Bia in various European markets.

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