New price system under pressure
Introduced less than three weeks ago, sources in the processing sector believe the future for the new price formula, which was devised by the Irish Meat Association, in consultation with the producer representatives, is already in doubt.
While some farming leaders gave a warm welcome to the formula-to-weight payment more in favour of the higher-quality carcasses, rank and file members have objected..
Some of the factories have confirmed this week they will not be switching over the payment structure to the formula, and others are finding it increasingly difficult to get the formula to gel with sellers.
As reported last week, there were variations of up to 300% in the margins between comparative grades at factories operating the new formula in the first week of operation.
Under the new system the difference in price between R3 and O4H grades should be 24 cent/kg. Analysis of the farmer pay sheet returns from the factories for the first week showed the difference ranging between 8 cents/kg and 24 cents/kg at the factories.
The set difference in price is 36 cents/kg. The difference between U3 and O4H grades varied from 13 cents/kg to 40 cents/kg. The difference under the new formula should be 36 cents/kg.
The analysis showed that the new formula as set down, operated at very few factories, despite a majority of the processing centres changing to quoting producers in line with the new price structure.
The new system will face its stiffest challenge with tighter supplies early in the New Year.
