A €50m fund is a substantial amount and possibly higher than some would have anticipated it to be.

Minister for Agriculture Food and Marine Michael Creed will bring details to Cabinet on Friday of a support scheme for beef farms who have been severely affected by the economic effects of the COVID-19 pandemic.

Winter finishers have borne the brunt of COVID-19 with beef prices collapsing during one of the most expensive times of year to finish cattle.

The package is expected to be fully funded by the Exchequer and will be subject to approval by the EU under state aid rules.

A close eye will be kept on the scheme conditions. There was widespread dissatisfaction in 2019 when a stocking rate deduction was applied to the BEAM scheme.

The scheme announcement has gone down well with farmers on the ground. However, some are wondering whether a catch will apply.

What was BEAM?

BEAM 1 was introduced in 2019 to compensate farmers for losses incurred due to Brexit uncertainty in the market.

At the time, the IFA made a submission to Government demonstrating the losses incurred by beef finishers as a result of Brexit.

Bovine animals (older than 12 months of age) sent to slaughter in the reference period from 24 September 2018 and 10 May 2019 were eligible for payment.

Suckler cows with progeny born from 1 January 2018 to 31 December 2018 were eligible for payment. Cull cows including Friesians were eligible for payment as long as they were slaughtered out of a beef herd.

Payment was up to a maximum of 40 suckler cows with progeny born in 2018 at €40/head and up to a maximum of 100 bovine animals older than 12 months sent for slaughter during the reference period at a payment rate of €100/head.

The maximum payment per farm was €11,600, where at least 40 sucklers calved in 2018 and 100 animals were finished during 24 September 2018 to 10 May 2019.

The average payment on suckler-to-weanling farms was €553, while the average payment on finishing farms was €1,819.

One of the conditions of the scheme was to reduce organic nitrogen output per farm by 5%.

Some 34,517 farmers applied using up €78.1m of the €100m allocated to the scheme. The application process was very simple and payments for this scheme were made in December 2019.

What could the payment per head be?

If the scheme takes the format of BEAM 1, it’s likely to be a simple application process.

The scheme budget in 2019 was based on the losses incurred by beef farmers who slaughtered cattle during a defined period.

Dairy cows were included for payment as long as they were slaughtered out of a beef herd. Dairy herd owners with less than 40 dairy cows were eligible for payment in 2019.

If we look at the number of animals slaughtered between 16 March and 5 June 2020, the total number of animals comes to 343,114 head during that period.

If the funding for the scheme was €50m, that would mean the compensation would be around €150/head.

This doesn’t take into account cattle sent to slaughter from dairy herds being excluded, so the payment could be higher based on similar principles applied to BEAM 1. Feedlots will also likely be excluded for payments similar to before.

IFA submission on COVID-19 beef price losses

Using the same methodology that the IFA used to calculate the Brexit-related beef price losses in 2019 for BEAM 1, it applied the same principle to calculate Brexit and Covid losses from 1 January 2020 to 17 May 2020.

This was then submitted to the Department of Agriculture to form the basis for the new scheme a number of weeks ago.

IFA livestock chair Brendan Golden welcomed the news of a beef package from the Government, saying the IFA had lobbied hard over recent weeks to get delivery on this.

He said the COVID-19 crisis has hit beef prices very hard which meant finishers had taken a severe financial hit.

Golden said finishers had shipped losses of up to €200 per head this spring. He said the IFA calculated farmers selling cattle between January and mid-May had incurred beef price losses of €111m.

Comment

Beef finishers have endured huge losses over the last three months as a result of COVID-19 restrictions.

Irish Farmers Journal analysis in December 2019 pointed to a beef price close to €4.50kg needed for winter beef finishers to break even.

Where it ended up was closer to €3.50/kg. That's a €300 deficit on a 300kg carcase.

News this week in the Irish Farmers Journal that the Government has been supporting beef factories to the tune of millions of euro over the last few months via the COVID-19 wage subsidy scheme left a sour taste in the mouth of many beef finishers struggling to make ends meet.

The BEAM 2 scheme will build on the BEEP scheme announced earlier this year and will bring vital supports to the struggling beef sector.

The devil will be in the detail though and it’s important the scheme is kept as simple as possible, with no hoops to jump through as in BEAM 1. The fact that the scheme is fully funded by the Irish Exchequer should mean more simplicity.