In the edition dated 15 July, we set out a number of potential scenarios showing how a new Beef Carbon Reduction scheme might impact farm payments from 2025 onwards.
This scheme is due to start in early 2024 and encourages farmers to kill cattle at younger ages.
To be eligible in the first year, prime NI origin cattle must be slaughtered at under 30 months, moving to less than 28 months in 2025, under 27 months in 2026, and less than 26 months for 2027 and beyond.
The first payment is likely to be made in the spring of 2025 (relating to the number of eligible cattle killed in 2024), with funding coming from a top slice taken from the overall budget for farm payments.
A new Farm Sustainability Payment (FSP) is due to replace the current Basic Payment Scheme (BPS) in 2025.
If the payment rate for the beef scheme is £40 per head, DAERA would need to take around 4.8% off the budget (£14m). If the payment rate is £80 per head, it works out at around £28m, or 9.5% of the overall budget.
The analysis showed that if DAERA opts for a rate of £80 per head, it will lead to an increase in total payments to most farmers finishing cattle.
In particular, there will be a significant shift in monies towards larger beef-finishing businesses, although they will probably give a significant proportion of this away in higher prices for stores.
Queries
We received a number of queries after the July article, with those farmers who do not keep any cattle concerned about the hit to their payments.
While these concerns are valid, there might be some opportunities to make up for lost income by way of new agri-environment schemes (Farming With Nature).
However, most questions were related to what impact new beef schemes might have on a suckler cow and sheep farm that is not finishing any cattle.
As well as the new beef scheme starting in 2024, DAERA plan to open a suckler cow measure in 2025, meaning that the first payment is likely to be made in 2026.
It comes with two main eligibility requirements. The first is that heifers must calve down at under 34 months in the first year, moving to under 29 months by year four.
The second is around calving interval (CI), and only those mature cows under 415 days (from one calving to the next) will be eligible for payment in the first year, gradually moving to under 385 days by year four.
Each farm is to be given a quota based on a historical year. To be eligible, an individual cow must have a live calf.
However, much of the detail is yet to be confirmed, including around a possible minimum retention period.
We also don’t know how DAERA will determine what the quota will be (the number of cows calved and the average number kept over the year can be two very different figures). As well as that, will there be implications if farmers keep more cows than quota or restrictions around the number of heifers that can be claimed?
Miss out
The Department’s own analysis has highlighted that, unless things change, around 30% of sucklers in NI will not meet a 415-day CI target in year one of the scheme. In the two examples (left, Tables 1 and 2) we assume that 20% of cows miss the CI target, which equates to nearly 50,000 sucklers in NI. The remaining sucklers get a payment of £100 per head, which is a total pot of around £20m.
When added to a £80 per head payment in the Beef Carbon Reduction Scheme (costing £28m per year), it uses up the majority of the potential £50m budget created by taking 17% off all payments (the maximum allowed under World Trade Organisation rules).
These potential payment rates are purely indicative, and the scenarios have been created to potentially show the direction of travel.
We await final decisions from DAERA.
Store producers will need more from the market
The first scenario (see Table 1) is a 50ha beef and sheep farm with payments at the NI average, carrying a suckler herd of 30 cows. All calves are sold as weanlings or stores.
In 2025, with 9.5% taken off the Farm Sustainability Payment to fund the new beef scheme, total payments to the farm are down £1,396.
To make up that gap, the farmer would need an additional £46.55/head from calf sales (which might happen given the extra payments coming to beef finishers).
By 2026 the new suckler payment kicks in. Assuming that 24 of the 30 cows meet the eligibility requirements, at a rate of £100/cow, it brings in £2,400.
But with 17% removed to fund both beef schemes in 2026, the farm is left with very similar payments to that received in 2024.
The second scenario (see Table 2) is a much larger beef and sheep farm of 250ha, with payments at the NI average and carrying 100 suckler cows. All calves are sold as weanlings.
With 9.5% of money taken off in 2025, total payments are down £6,982.50. To recover that from the market, weanling prices would need to be up nearly £70/head.
In 2026, even with the new suckler payment in place (and assuming 80% of cows are eligible), it still leaves total payments below what they were in 2024 – weanling prices would need to be up £45/head to compensate. In both scenarios, if farms took all calves through to beef, they would actually have higher total payments in 2025 and 2026.
The examples highlight that if a farm only has a small number of sucklers, instead mainly concentrating on a sheep flock, they will have lower payments in all scenarios, unless a sheep scheme (lobbied for by farm organisations) is unveiled at a later date.
Read more
New beef scheme to shake up farm payments
Farmers should take note of new beef schemes
In the edition dated 15 July, we set out a number of potential scenarios showing how a new Beef Carbon Reduction scheme might impact farm payments from 2025 onwards.
This scheme is due to start in early 2024 and encourages farmers to kill cattle at younger ages.
To be eligible in the first year, prime NI origin cattle must be slaughtered at under 30 months, moving to less than 28 months in 2025, under 27 months in 2026, and less than 26 months for 2027 and beyond.
The first payment is likely to be made in the spring of 2025 (relating to the number of eligible cattle killed in 2024), with funding coming from a top slice taken from the overall budget for farm payments.
A new Farm Sustainability Payment (FSP) is due to replace the current Basic Payment Scheme (BPS) in 2025.
If the payment rate for the beef scheme is £40 per head, DAERA would need to take around 4.8% off the budget (£14m). If the payment rate is £80 per head, it works out at around £28m, or 9.5% of the overall budget.
The analysis showed that if DAERA opts for a rate of £80 per head, it will lead to an increase in total payments to most farmers finishing cattle.
In particular, there will be a significant shift in monies towards larger beef-finishing businesses, although they will probably give a significant proportion of this away in higher prices for stores.
Queries
We received a number of queries after the July article, with those farmers who do not keep any cattle concerned about the hit to their payments.
While these concerns are valid, there might be some opportunities to make up for lost income by way of new agri-environment schemes (Farming With Nature).
However, most questions were related to what impact new beef schemes might have on a suckler cow and sheep farm that is not finishing any cattle.
As well as the new beef scheme starting in 2024, DAERA plan to open a suckler cow measure in 2025, meaning that the first payment is likely to be made in 2026.
It comes with two main eligibility requirements. The first is that heifers must calve down at under 34 months in the first year, moving to under 29 months by year four.
The second is around calving interval (CI), and only those mature cows under 415 days (from one calving to the next) will be eligible for payment in the first year, gradually moving to under 385 days by year four.
Each farm is to be given a quota based on a historical year. To be eligible, an individual cow must have a live calf.
However, much of the detail is yet to be confirmed, including around a possible minimum retention period.
We also don’t know how DAERA will determine what the quota will be (the number of cows calved and the average number kept over the year can be two very different figures). As well as that, will there be implications if farmers keep more cows than quota or restrictions around the number of heifers that can be claimed?
Miss out
The Department’s own analysis has highlighted that, unless things change, around 30% of sucklers in NI will not meet a 415-day CI target in year one of the scheme. In the two examples (left, Tables 1 and 2) we assume that 20% of cows miss the CI target, which equates to nearly 50,000 sucklers in NI. The remaining sucklers get a payment of £100 per head, which is a total pot of around £20m.
When added to a £80 per head payment in the Beef Carbon Reduction Scheme (costing £28m per year), it uses up the majority of the potential £50m budget created by taking 17% off all payments (the maximum allowed under World Trade Organisation rules).
These potential payment rates are purely indicative, and the scenarios have been created to potentially show the direction of travel.
We await final decisions from DAERA.
Store producers will need more from the market
The first scenario (see Table 1) is a 50ha beef and sheep farm with payments at the NI average, carrying a suckler herd of 30 cows. All calves are sold as weanlings or stores.
In 2025, with 9.5% taken off the Farm Sustainability Payment to fund the new beef scheme, total payments to the farm are down £1,396.
To make up that gap, the farmer would need an additional £46.55/head from calf sales (which might happen given the extra payments coming to beef finishers).
By 2026 the new suckler payment kicks in. Assuming that 24 of the 30 cows meet the eligibility requirements, at a rate of £100/cow, it brings in £2,400.
But with 17% removed to fund both beef schemes in 2026, the farm is left with very similar payments to that received in 2024.
The second scenario (see Table 2) is a much larger beef and sheep farm of 250ha, with payments at the NI average and carrying 100 suckler cows. All calves are sold as weanlings.
With 9.5% of money taken off in 2025, total payments are down £6,982.50. To recover that from the market, weanling prices would need to be up nearly £70/head.
In 2026, even with the new suckler payment in place (and assuming 80% of cows are eligible), it still leaves total payments below what they were in 2024 – weanling prices would need to be up £45/head to compensate. In both scenarios, if farms took all calves through to beef, they would actually have higher total payments in 2025 and 2026.
The examples highlight that if a farm only has a small number of sucklers, instead mainly concentrating on a sheep flock, they will have lower payments in all scenarios, unless a sheep scheme (lobbied for by farm organisations) is unveiled at a later date.
Read more
New beef scheme to shake up farm payments
Farmers should take note of new beef schemes
SHARING OPTIONS