Factory specifications and price were the two main reasons thousands of farmers took to the factory gates last August and September. Farmers who had become increasingly frustrated with price turned their efforts to factory specifications with particular reference to the 30-month age limit and the four-movement rule.

Farmers felt that some of these in-spec rules were being used by factories to manipulate price and supply of cattle. The protests ended with very little meaningful change to in-spec requirements with the 30-month rule and four residencies staying in place.

Thirty-month rule

The 30-month rule has its origins in the BSE crisis. Ireland is still ranked as a “controlled risk” for BSE by the World Organisation for Animal Health (OIE). As BSE is a disease associated with older animals, 30 months was selected as the point under which it would be unlikely for BSE to be present. As an aside, there would be a strong case to have the 30-month limit removed if Ireland again achieved the higher negligible-risk BSE status which we held briefly in 2015 until a random case was discovered in Co Louth. Therefore, some countries and some UK retailers continue to have it as a requirement.

If we want to supply their markets, we have to meet their specifications to achieve the highest possible price for our beef. Some will argue that animals need to be finished under 30 months to achieve a margin. Keeping animals longer increases feed costs. There is also an added bonus of reduced carbon footprint by slaughtering animals at a younger age. The new in spec bonus pays €0.08/kg for cattle aged 30 to 36 months once all other requirements are met.

China

In recent weeks, some factories have introduced a China bonus. This has been in the region of €0.10/kg where cattle are slaughtered and are eligible for the Chinese market. It’s estimated that the Chinese market could take in excess of 20,000t in 2020. These are not high-value cuts but will still be an important avenue for beef sales in 2020 and beyond. The Chinese market has a number of key requirements:

  • Animals must be under 30 months.
  • Animals must have come from a herd where there has been no TB in the last 12 months.
  • Animals from feedlots including TB feedlots are not eligible.
  • Animals must be processed in a China-approved factory.

    • QA status

    In order to achieve the in-spec bonus on animals, the farm where they are being slaughtered from must be Bord Bia quality-assured. This involves passing a quality assurance audit every 19 months. Quality-assured beef is required by all the major UK retailers and food service companies such as large burger chains.

    There is also a requirement for cattle to be on a quality-assured farm for a minimum of 70 days pre-slaughter. This can be completed by spending 60 days on the last farm and 10 days on another quality-assured farm.

    Four farm residencies

    This is sometimes called the four-movement rule and this leads to confusion around what is eligible and what is not.

    The rule states that an animal may have no more than four farm residencies during its lifetime to achieve the in-spec bonus.

    Thrive heifers slaughtered by Kepak Watergrasshill. \ Donal O'Leary

    Some argue that this is another stick that factories use while others question if there is any margin left after four residencies if each owner has to make a margin.

    Weight

    Weight limits are another point of contention for farmers.

    Processors say that heavy carcases don’t attract premium prices because of striploin cuts not fitting into retail trays on supermarket shelves. In the past, weight limits were generally introduced at a time when supply exceeded demand.

    When cattle supplies were scarce, less emphasis was placed on weight limits. Weight limits hit suckler-bred progeny particularly hard. As part of the agreement reached in September, factories stated that any new weight restrictions would be given four months in advance of being implemented.

    Breeds

    There are a number of breed bonus schemes in the Aberdeen Angus, Hereford, Shorthorn and Belted Galloway breeds. These bonuses vary depending on the time of year but are generally around €0.10/kg. Breed bonuses have their own grading and weight requirements.

    QPS grid

    The current QPS grid is under review by Teagasc with an initial desktop study to be published in the coming weeks. There have been calls for an increase in the price differential of different grades. This would reward cattle grading R+ or better but penalise lessor grading cattle. High fat scores and poorer grading cattle get hit with higher penalties on the QPS grid.

    What the in-spec bonus payment means for you

    The new in-spec bonus payments were introduced in September by processors after an agreement was reached with farm organisations to end factory protests.

  • Beige box: an in-spec payment of €0.20 will be made on heifers and steers grading within the beige shaded area on the existing quality-based pricing grid. To obtain this bonus, steers and heifers under 30 months also need to be from a quality-assured holding with a residency period of at least 60 days on the last farm. The residency period still remains at 70 days on a quality-assured farm but 10 days of this may have been spent on another quality-assured farm. Animals must have also had a maximum of four farm residencies to obtain the bonus.
  • Red box: an in-spec bonus of €0.12 will be paid on cattle grading 0 - or 4 + meeting all other in-spec criteria on movements, residency and quality-assured status.
  • Black line: steers and heifers grading an O= to U+ on confirmation or 2+ to 4= on fat (beige shaded area) within the 30- to 36-month age bracket will now qualify for an €0.08 bonus once they meet all other in-spec criteria such as residency, movements and quality-assured status.