A lot of farmers receive the text message sent out every Friday by the Livestock and Meat Commission (LMC), which sets out the quotes for beef in the week ahead.

The information is an indicator of trends, but the actual quotes within the text are usually way off the pace of the market and in many instances, up to 30p/kg behind what is actually available.

So what is going on and why do factory agents continue to pass on these low quotes to the LMC?

The belief among farmers is that it is partly a strategy to limit the prices being paid for some traditional breeds, given that scheme bonuses are paid on top of base quotes offered by a factory.

As shown on p6, the actual price advantage for R3 grading Angus cattle over Limousin and Charolais counterparts, averages just over 13p/kg, which is roughly half what might be expected by farmers supplying into these schemes.

Part of the reason for that is probably because beef finishers are better able to negotiate on price when outside the constraints of a scheme.

There is also a range in what is actually paid, with larger suppliers getting higher prices.

These people carry a lot of risk in their businesses and are crucial for factories when looking to secure weekly throughput, so it is not unfair they receive some level of reward.

Practical

However, the point made about factories looking to keep the amount paid for traditional breeds in check, does not justify why some have quoted as low as 460p/kg this week for U-3 grades to the LMC.

Everyone knows it is a nonsense, but the key problem is this: if a factory gives a more realistic base quote of 484p/kg, it suddenly looks like beef prices have jumped 24p/kg, so farmers will automatically be looking for prices well over 500p/kg.

Perhaps the only answer to this would involve the LMC not publishing any base quotes for a few weeks and then returning with something that is actually relevant.