The phased introduction of incremental headage payments under the Beef Carbon Reduction Scheme (BCRS) is disrupting supplies of finished cattle, sources in the meat-processing sector maintain.
Under the scheme, BCRS payment rates for prime cattle increase from £20 in January to £40 from 1 February, with further rises in March and April.
Factory agents indicate farmers are holding back animals to claim the higher payment, leaving them struggling to source numbers this week.
To entice farmers into off-loading cattle, processors are having to up the ante with price deals that compensate for the extra £20 payment on animals processed before 1 February.
That means deals of 485p/kg to 490p/kg have become more common for prime steers and heifers this week.
While there may be a rebalancing on prices next week, factory agents expect a repeat of farmers holding animals in late February ahead of BRCS payments rising to £60 on 1 March. From 1 April onwards, the rate is £75/head.
The BCRS came into effect on 1 January, with headage payments payable on prime cattle slaughtered under 30 months of age during 2024.
Processors initially argued in favour of the phased introduction, mainly to avoid supply chain disruption to kills in late 2023.
But with the benefit of hindsight, sources indicate the monthly increases are creating greater and longer-term problems, compared to an instant rollout of payments at the upper limit.
The aim of the BRSC is to incentivise farmers to reduce the slaughter age of cattle, thereby lowering carbon emissions from livestock farming.
The 30-month age limit in 2024 reduces to 28 months next year, then 27 months in 2026, and 26 months by 2027.
With farmers eager to avail of BCRS payments before animals exceed the specified age limits, processors are handling a growing number of cattle outside of market specification for fat cover.
That trend is expected to continue unless farmers adapt finishing systems to ensure animals are properly fleshed, particularly in the coming years when age limits are reduced.ADVERTISEMENT
There are also some concerns at the lack of a 16-month age limit for young bulls, with fears some finishers will hold bulls to achieve higher weights, given the current penalties applied by meat plants for over-age bulls are effectively cancelled out by the BCRS payment.
As market outlets for both under-finished steers and heifers and over 16-month young bulls are limited, processors indicate they may need to review penalties going forward.