In the northern edition of this week’s Irish Farmers Journal, David Wright explains how the payment grid for factory cattle in Northern Ireland is now out of date. Read more about that here.

The reason is nothing to do with cattle grading, but rather it is a simple mathematical calculation based on the price that is paid for cattle in the factory. When the grid was established in 2011 the price paid was approximately half what it is today.

The gaps between the different grades on the scale were designed to offset the variation in beef yield between the different grades of cattle at that time, and have remained the exact same since. David Wright explains in detail the formula and yields used to calculate this difference and where it should be now to reflect that beef price is now approximately double what it was then.

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The basic logic of the grid is that it properly reflects the meat value of the carcase, and the price differential between the grades should fluctuate with cattle price. Of course it wouldn’t make sense to adjust the gaps every week on the basis of a few pence (or cents) movement in the price but a periodic adjustment should take place to reflect the greater movement over time.

Republic of Ireland grid

While there is a different payment grid south of the border, the same principle applies. The Quality Payment System (QPS), now often referred to simply as the “grid” was introduced following extensive work by Teagasc that involved the deboning of several hundred different beef carcases to calculate a value.

This was the basis of the price differential between grades on the grid and was designed to reward farmers for the better cattle they produced with higher yields of saleable meat.

The QPS was introduced at the end of 2009 and in 2015, Michael Drennan one of the architects of the QPS through his role with Teagasc, went on the record to call for a review. His point at that time, over a decade ago, was that the value of each incremental rise in confirmation should be 24c/kg instead of 18c/kg on the U= grade as it was and still is.

This was based on the fact that the cattle price had increased from around €3/kg when the grid was designed to €4/kg by 2015. If the original was out of date in 2015 when the beef price was in the region of €4/kg, where does that leave it now with beef price above €7/kg?

Don’t rock the boat

It is fair to say that there isn’t much enthusiasm either side of the border to review their respective price grids.

When they were introduced, there was plenty of debate and disagreement on the differentials between grades, usually motivated by the type of cattle any individual farmer had. Once the grids became settled, there was a general consensus to leave well enough alone, particularly if none of the farm organisations or lobby groups were raising the issue.

Therefore the price gaps have remained essentially the same since they were established even though they now pay relatively more for plainer cattle and less for the top quality animals.

Once the grids became settled, there was a general consensus to leave well enough alone, particularly if none of the farm organisations or lobby groups were raising the issue

It is also a fact that over the past year when cattle prices were rising sharply, the grid was frequently passed over in favour of flat rate buying, particularly south of the border.

In Northen Ireland, most cattle are still priced on the grid with flat rate deals the exception though there may be some greater flexibility within the grid structure.

If not – updating the grid to reflect the higher value of cattle penalises the best quality cattle in favour of plainer ones, flat rate buying does so even more. In any battle of wits between a factory buyer and a farmer seller, in most cases the buyer will negotiate a flat rate price that favours the factory over the farmer.

Comment: price should reflect true carcase value

Any review of the grids either side of the border inevitably will have what are regarded as winners and losers, even if the adjustment is done to reflect the true market value of the animal.

As it is, farmers presenting the best confirmation suckler-bred cattle getting U & R grades are getting less than the meat value while the grid is paying plainer cattle with lower grades more than their meat yield is worth.

Many consider that the potential friction in the debate is in itself enough reason to leave the payment structure as it is. Also, there hasn’t been a lobby for review so it could be asked – is this a solution looking for a problem?

However, the reality is that price gaps designed when beef price was completely different to what it is now, no longer accurately reflect the true meat value of beef carcases. If we believe the price paid should reflect the true carcase value, then we should have the debate even if it is a difficult one, especially with 60% of our factory cattle coming from the dairy herd and suckler cow numbers in steady decline.