Grid penalties costing livestock farmers €32m
Livestock farmers are losing more than €32m a year to beef grid penalties applied to poorer-grading animals.
A study of the 2017 cattle kill commissioned by the ICMSA has shown that the penalties being applied by the factories to O and P+ steers and heifers under the Quality Pricing System (QPS) has increased by 75pc over the past five years.
ICMSA president Pat McCormack said the results of the study justified an immediate and full review of the grid, pointing out that such an examination was agreed nearly three years ago at the Beef Forum but never happened.
The study findings show that O grade stock accounted for almost half the steer kill in 2017, with one in every six of the remaining animals grading P+. The total cost to producers in penalties on the O and P+ grade steers and heifers amounted to €32.6m.
Under the QPS payment system, which was introduced in 2009, the deduction in price (from base) for O grade steers and heifers ranges from 12c/kg to 42c/kg, while P+ grade animals carry a price reduction of between 30c/kg and 54c/kg.
The study shows that suppliers of P+ grade steers were penalised an average of €85/head in 2017, with the total penalty applied to the sector exceeding €5.24m.
More than one in every three heifers were O grade in 2017, with accumulated penalties in excess of €8m, reducing returns to producers by an average of €51/hd.
P+ grade steers within the national kill have increased by 75pc since 2012, while the percentage of O grade steers has increased by 11pc.