Farm Ireland

Friday 27 April 2018

Factories are accused of moving to a two-tier grid

Declan O'Brien and Joe Healy

The factories have been accused of moving to a two-tier beef grid after penalties of up to €130/hd were levied last week for non-quality assured cattle.

Reductions in the base price of between 10c/kg and 30c/kg have been introduced by slaughter plants for stock that do not qualify for the factories' In-Spec Quality Assurance (QA) bonus.

Plants in the west and south were quoting a base of 380c/kg last week for cattle that did not qualify for the In-Spec QA bonus. This was 30c/kg below their quoted base price of 410c/kg.

In one case reported to the Farming Independent, a farmer in the west supplied 10 non-QA cattle to Dawn Ballyhaunis.

The seller was paid a base price of 380c/kg, despite the factory being on a quoted base of 410c/kg.

The 30c/kg penalty meant the farmer in question lost €130/hd on the 10 cattle, or €1,300 overall, as they killed out at an average of 433kg.

Under the terms of the quality payment system (QPS) or grid, a 12c/kg bonus on top of the quoted base is to be paid for all In-Spec QA cattle.

However, this latest move by the factories appears to confirm that a two-tier pricing system is developing, with severe penalties being imposed for non-QA steers and heifers.

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Farmers confirm that factories right across the country appear to be working off this two-tier pricing system.

However, Meat Industry Ireland (MII) refuted suggestions that the factories had unilaterally moved off the grid.

Cormac Healy of MII said there had been a widening in the gap between the prices paid for In-Spec QA cattle and non-QA stock since earlier in the year.

He said these changes reflected the limited demand that existed for non-QA beef in the wake of the horsemeat scandal.

The country's flagship beef customers, including British and Continental supermarket chains and fast food giants such as McDonald's and Burger King, are all demanding QA beef.


Buyers for non-QA beef have been limited to the manufacturing and service ends of the market as a consequence. The factories point out that returns from these customers are not comparable to those available from their top tier contracts.

"Clearly the market is sending a signal that it doesn't want non-QA cattle," Mr Healy said.

However, he denied that the meat factories were introducing a two-tier QPS.

"The base price is dictated by market returns and there are different base prices for different classes of cattle," he said.

Mr Healy pointed out that it was up to each farmer to negotiate the sale price of their cattle. He added that it was open to all farmers to join the Bord Bia Quality Assurance Scheme.

Meanwhile, base prices for bullocks held at 410c/kg this week, with up to 415c/kg being paid in some cases.

Base prices for heifers were on 415-420c/kg, with up to 430c/kg being secured by some farmers.

R-grade bulls were on 400c/kg, with U grades on 410c/kg.

Young bulls of under 16 months were making a base of 410c/kg on the grid.

Irish Independent