Tommy Kelly is a cattle farmer. He buys cattle, he fattens cattle, and he sells cattle to the factory. Tommy is a specialist, he has invested in sheds, tanks, diet feeders, handling pens and crushes in the yard and in fields.

The reference years

Tommy was busy during the reference years. He finished 200 cattle on his 50ha (124 acre) farm. His system was simple: run some young stock on grass through the grazing months, but also making plenty of silage. He buys in all his feed. Sell the cattle for slaughter when fit. It was a high-cost model, and during the reference years, as the cattle trade tried to cope with BSE, was only returning losses.

System

Tommy bought 90 young male cattle each spring to graze. He looked for “clean-eared” cattle, so he could draw both the nine-month and 22-month Special Beef Premia on each of these cattle. He also gained the extensification premium on these 90 cattle.

He also filled his sheds every autumn with older cattle/forward stores.

As Tommy had exhausted his 90-animal limit on both the Special Beef Premia, he was now looking for animals that were “punched out”, that is where both nine-month and 22-month premia had been drawn. He had a shed of bullocks and a shed of heifers.

All cattle were finished, and the slaughter premium of €80 gained on a total of 200 animals. As a result, Tommy made out well during the reference years. His payment was €46,600, which equated to an entitlement value in 2005 of a whopping €932/ha.

Ciolos and convergence

These payments were cut significantly due to convergence from 2015-2019. That said, Tommy still has a very hefty payment in 2021. His entitlements (including Greening) are worth €693/ha, giving an overall payment of €34,650.

Current proposals

Now, Tommy may brace himself for further cuts. CRISS is taking 5% from his payment and returning €660, less than 2%. Eco schemes are taking 25%, and returning €64/ha, less than 10% of his payment. Then, add further convergence. Overall, Tommy’s payment is set to fall to €26,640 in 2023, and to €20,360 in 2026.

Tommy’s other big problem is that as a finisher, he isn’t accessing much of the Pillar II funding directed towards the drystock sector. BGDP and BEEP are no use to him. He did apply for and receive the BEAM payment, but that was a one-off, and related to the market fallout from Brexit.

He isn’t on disadvantaged land, he’s farming on the rich plains of Meath. He is in GLAS, but it delivers less than half of what he got from REPS in the reference years.

Fallout

Tommy’s fear is that when he goes to the bank to borrow money to fill his shed, they will look at his declining direct payment and say no. Or maybe they won’t say no, but they will say yes but to less. It won’t happen this autumn, but it will happen soon, he thinks.

Will any of this affect the suckler farmers who sell to people like Tommy? Or calf to store drystock farmers? We won’t know for some time. During the Fischler and Ciolos reforms, a lot of debate and commentary revolved around whether cutting payments to finishers would affect ringside prices for the stock they are the bulk buyers of. With the impending reforms, we will soon find out either way.