The beef processor ABP has moved to offer farmers a ‘safety net’ price through its recently launched Advantage Beef Programme.
The move will offer farmers who join the programme some level of assurance on what they will receive for their cattle in the year ahead.
Farmers in all sectors are well aware of how the price they are paid for their produce can rise and fall, and the pig sector is currently a prime example of this.
Market volatility can have a significant impact on margins and where any level of assurance is provided by a processor on prices, it can only be welcomed by farmers as a step in the right direction.
Farmers who join ABP’s Advantage Beef Programme can be guaranteed a minimum price of €4.05/kg for an R-grade heifer or steer (plus breed bonus – if eligible) in a worst-case scenario – providing the animal meets the programme’s criteria. Other grades will be grid-priced accordingly off the €4.05/kg base.
While the ‘safety net’ price is well below what the processor is currently paying farmers for cattle, beef finishers will remember that this time last year, cattle prices were in a different situation.
It must be outlined that the above price is simply an assurance in the event of beef prices ever falling, and eligible cattle in the programme will be paid on the average quoted price (AQP) for steers and heifers of the seven ABP/Slaney plants on the week of slaughter on the grid.
By way of verification, the AQP will not diverge by more than €0.05/kg from the AQP for all the listed beef plants in the country.
For example, assuming this week’s average quoted price was €4.40/kg, then an in-spec ‘R-3-‘ grading Angus heifer processed by a farmer who is a member of the programme would secure the €4.40/kg base price plus a 20c/kg Quality Price System (QPS) bonus, as well as a 20c/kg breed bonus and the new 20c/kg Sustainability Bonus available to those who join the programme.
This would leave the above animal priced at €5.00/kg – assuming the farmer was a member of the programme and the heifer in question was eligible.
It is only in the event of beef price falling below the ‘safety net’ price of €4.05/kg for an R-grade animal that it would come into play.