Farm Ireland

Saturday 18 November 2017

Factories in frame over grid bonuses

ICSA highlights discrepancy in QPS returns from processors

Declan O'Brien

Declan O'Brien

The ICSA has accused the factories of not returning the full benefit of the new grading system to farmers for top quality stock.

The farmer body claimed that the factories appear to be deducting the full 18c/kg from O grade cattle compared to the R3 base, but are not giving back the correct bonus for U grade animals.

However, this assertion was rejected by Meat Industry Ireland (MII), with a spokesman for the processors insisting that those factories applying the quality payment system (QPS) were doing so fairly.

ICSA analysis of the official Department of Agriculture factory steer prices for the first week of February shows that the R3 price averaged 297.8c/kg.

The average 03 price was 279.57c/kg -- a cut of 18.21c/kg compared to the base, in line with what is prescribed by the price grid.

However, the bonus for U grade stock was just 11.5c/kg, 6.5c/kg short of the expected 18c/kg top-up for quality animals. On a 370kg carcass this equates to a loss of €24.

"This analysis reinforces the ICSA argument that the grid is not giving sufficient reward to encourage the breeding and feeding of U grade cattle," ICSA president Gabriel Gilmartin claimed.

"On the other hand, we are getting the worst of all worlds, where O grade cattle are being fully penalised," he added.

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Mr Gilmartin said the ICSA survey findings suggested that either the factories were not operating the grid system in line with what was expected or that many farmers are, in practice, selling off the grid and losing out heavily on U grade cattle.

However, Cormac Healy of the IFA dismissed any suggestion that the factories were in some way to blame for the discrepancy in the Department figures.

Mr Healy pointed out that the Department prices related to cattle killed both on and off the grid.

"There could also be a scenario where some stock is getting the 6c/kg quality assurance bonus, while other cattle are not," he explained.

Meanwhile, MII said that it supported moves by the IFA to have the QPS independently audited.

"MII welcomes any steps to address outstanding concerns that producers may have," Mr Healy maintained.

He also backed calls for Teagasc to come forward with a plan setting out how farmers could best utilise the QPS to maximise returns and reduce their production costs.

"The new quality standard gives clear market signals and rewards accordingly.

"It is important that we all work to improve understanding of the new system and that producers have the necessary technical advice on producing beef to meet these market requirements," Mr Healy claimed.

Irish Independent