Beef Aid Package: €100/head on the cards

What is the Beef Support Package?

The package was announced by Minister for Agriculture Michael Creed on Friday in response to the losses incurred by beef finishers during the COVID-19 lockdown. It is thought the scheme will follow a similar format to the BEAM scheme introduced in 2019, without as many stipulations or compliance requirements.

How much is it worth?

The funding allocated to the scheme is €50m. In will be funded from the national Exchequer – there is no EU funding involved. Depending on the amount of animals it will be paid on, the payment could range anywhere from €29/head to €158/head.

Will there be a limit on the number of stock I’m paid on?

The Irish Farmers Journal understands that a payment limit will be applied. Some larger finishers say there shouldn’t be a limit while some smaller finishers say the payment should be capped at 100 head.

Are factory-owned feedlots eligible for payment?

No. The minister has said that factory owned feedlots will not be eligible for payment.

What about weanlings and store cattle?

The minister has stated that the package is designed to aid beef finishers to compensate them for losses incurred on finishing cattle due to COVID-19 restrictions. It is hoped the payment will indirectly help store and weanling producers when finishers are purchasing stock back in again.

Where’s the catch?

The package, while similar to BEAM, won’t have many of the strict conditions attached to it. The only condition at the moment seems to be that the applicant is a member of the Bord Bia Beef Quality Assurance Scheme. Stock reductions or participating in environmental schemes don’t appear to be part of the package. This was a condition attached to the EU money last time around.

What’s the background?

A number of weeks ago the IFA made a submission to the Department of Agriculture outlining the losses being incurred by beef finishers as a result of COVID-19 restrictions. Beef markets around Europe were hit by low demand from the food service industry, which led to a drop in farmgate prices. This prolonged period of reduced prices has put huge pressure on beef finishers, especially winter finishers who seem to bear the brunt of poor prices year after year. An Irish Farmers Journal analysis last October estimated that winter finishers would need €4.40/kg to break even. An in-spec R= steer is coming into €3.80/kg this week when the in-spec bonus is included. That’s €0.60/kg short of where it needs to be. On a 350kg carcase, the loss comes to €210/head. It’s a substantial loss and, when multiplied up by 50 head, it’s over €10,000, enough of a deficit to put any business into difficulty.

What are the details?

The package is worth €50m to Irish farmers with few conditions attached. There is some debate around what the payment rate should be and how the reference number should be calculated. There is widespread agreement that the payment should be made retrospectively on cattle killed in the past. Taking a blanket approach for the rest of 2020 could have severe market distortion consequences and could play into processors’ hands. It’s thought that all finished animals will be included this time regardless of dairy or beef farm origin. It’s also being clarified that if a farmer sells a finished animal in the mart and that animal is slaughtered within 30 days, that the farmer that sold the animal gets paid.

The graphic above outlines the different payment rates based on different scenarios being applied.

What happens next?

The main farm organisations were briefed by the Department of Agriculture this week and it’s understood that each of them are to put forward proposals on how the money should be paid. Written submissions are to be sent later this week. The package will be governed by EU state aid rules but this is not expected to be an issue given the relaxation of these rules due to COVID-19 supports being rolled out across the EU. It’s expected that the application will be kept very simple, similar to BEAM with a single opt-in box to be ticked online. The AIMS database will dictate what animals are included for payment.

The Irish Farmers Journal understands that the applications will be open in July with the aim of making payments to farmers in September/October. This is an important point. The Department of Agriculture came in for some criticism in paying out the BEAM money. Payment was made in December 2019, which was well past the peak of autumn sales of store cattle and weanlings.

The €50 scheme is a big win for the beef sector and has been broadly welcomed by the farm organisations. It seems to be going down well with farmers on the ground as well. There are a lot of questions to be answered around what the payment rate will be and who will get it. There seems to be widespread agreement that the payment rate needs to be around €100/head. Anything less will be a long way off losses made on finishing cattle this spring. Some might say it’s a sticky plaster on another cut and you have to wonder how many more sticky plasters can be stuck on. Beef farmers didn’t create COVID-19 but are suffering because of it.

Aiming in the dark every year just isn’t working and we need to start thinking long-term about support models that move away from crisis payments

There have been many calls for a long-term strategy for the Irish beef industry.

Aiming in the dark every year just isn’t working and we need to start thinking long-term about support models that move away from crisis payments and give clear direction to Irish beef farmers on what the future looks like, what the level of supports will be and then let people make the decision to exit production or stay in business.

Creating security around a long-term plan will help everybody make better decisions. In the interim period, it’s vital to get this money paid out as quickly as possible to the farmers who need it the most.