Strong Incentives for Farm Quality Assurance

NORTHERN IRELAND - In the third quarter of this year (July - September), there has been a significant difference between the farmgate price paid for FQAS and non-FQAS cattle in Northern Ireland, with the benefits of FQAS membership now greater than during the same period in 2009, particularly for steers and heifers.
calendar icon 22 October 2010
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As Table 1 shows, over the 13 weeks to the end of September, NI Farm Quality Assured steers and heifers attracted a premium of 11-14p/kg more than their non-FQAS counterparts. During the same period last year, the differential was 5-8p/kg on average, depending on grade.

The increased differential ought to provide an added incentive to farmers when it comes to membership of the scheme and this is borne out by the figures in Table 1 which show that 96.6 per cent of cattle in these grades were FQAS in Quarter 3, 2010. Last year, for the same grades, only 94 per cent of cattle were farm quality assured.

The increased differential between FQAS and non-FQAS stock can be traced back to the introduction of a new payment grid last November when the factories started applying a bonus on in-spec cattle and more rigid deductions on out-of-spec cattle. At this stage, the new payment grid is well-established with an 8p/kg bonus paid on in-spec steers / heifers. The in-spec criteria generally include FQAS, grade, age and weight, with some further requirements applied in certain factories. Steers and heifers that fail to meet all the bonus criteria attract the base price and those that weigh more than 420kg, are older than 30 months or are non-FQAS are subject to further deductions. The standard deduction quoted for non-FQAS cattle of £30/head which was introduced in 2001 is still in place. This non-FQAS deduction has always been applied, albeit to a greater or lesser extent depending on the availability of cattle. However, with abonus now paid on FQAS cattle that meet all other criteria in the specification, the benefit of FQAS approval is now potentially greater at £40 to £49 per head for the grades listed in Table 1 than it previously was.

In the third quarter last year for the grades listed in Table 1, the differential ranged between £17 and £29 per head. While the new payment system provided a bonus for in-spec steers and heifers, there is no such bonus for young bulls at the plants. This has meant that the differential between FQAS and non-FQAS is not aswide for bulls as it is for steers and heifers in the last quarter. Table 2 shows that the difference in price paid for FQAS and non-FQAS young bulls ranged from 6 to 7p/kg in the last quarter on U3, R3 and O+3 stock (£19 - £23 per head). However, this is greater than last year when the differential was only 3-6p/kg (£8 - £19 / head) and perhaps as a result, the proportion of FQAS bulls for these grades has risen slightly in Q3 2010 compared to the same period in 2009.

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