NI study shows why beef sellers must haggle

Study of the beef market in Northern Ireland has indicated that some farmers can negotiate top-ups of as much as 20p/kg higher than base quotes.

Quoted base prices for fat cattle are being topped up with 2p or 3p/kg on average in Northern Ireland, recent analysis by the Livestock and Meat Commission (LMC) shows.

LMC experts examined actual prices paid at factories in the third week of June.

They took into account all bonuses and penalties, and concluded that sellers of U-3 grade steers earned price top-ups of at least 2p/kg above the base prices quoted.

For U-3 grade heifers, top-ups were at least 3p/kg between prices quoted and prices paid.

For R-grading cattle, the reported prices were at least 3p/kg higher than quotes.

In Northern Ireland, an 8p/kg in-spec bonus is available, for UK cattle within certain grade, weight, and age limits, from farms participating in the Farm Quality Assurance Scheme (FQAS).

There are also bonuses of 8-36p/kg for Aberdeen Angus cattle and 8-20p/kg for Herefords. Cattle of these breeds were removed from the top-up analysis.

Deductions are made for cattle that are over-age, overweight and non-FQAS.

The difference between quotes and prices could be explained in two ways, according to the LMC.

All sellers of U-3 grade heifers may have received the 8p/kg bonus, plus a top-up. But examination of early March prices indicated while some sellers got only quoted base prices, the top third of cattle earned as much as 15-20p/kg more than base quotes. Prices paid for the bottom third of cattle were more in line with quotes.

“It is likely that the wide range in prices is explained not only by the difference in price paid for in and out of spec cattle, but also on the ability of producers to negotiate the best price.

Producers who have a good relationship with the processors due to a history of producing sufficient numbers of high quality cattle to the right spec are in a strong position to negotiate better prices. This is particularly relevant when cattle numbers are tight,” said an LMC spokesperson.

With the Northern Ireland prime cattle kill for the year to date nearly 12% down on the same period last year, farmers selling cattle have leverage in the market.

“With this in mind, we would advise producers to take the base quotes as being subject to further negotiation,” was the LMC advice.