SCEP: Knowing the worth of full compliance

Modifications to the calculation of the EuroStar indexes for cattle have left many suckler farmers in a state of confusion, particularly those enrolled in the Suckler Carbon Efficiency Programme (SCEP), writes James Fitzgerald, Drystock Advisor, Teagasc Ballina.

Recent changes made to the calculation of the EuroStar indexes of cattle have generated confusion and uncertainty among suckler cow farmers, who are asking themselves what these changes mean for their cow herd, their future breeding decisions and their compliance with the terms of the Suckler Carbon Efficiency Programme (SCEP scheme) to which many have signed up to.

Firstly, not all suckler cow farmers are directly affected by these changes. Farmers not signed up to SCEP or producing cattle to be purchased by farmers in SCEP are relatively unaffected. Secondly, only 16% of cows that were 4 or 5 star before the changes have fallen to lower star ratings (albeit with some herds feeling the effects worse than others). Thirdly, if a cow, eligible heifer or stock bull was 4/5 star at the start of the SCEP scheme, they will continue to count towards the targets even if their star rating has fallen since.

That said, certain farmers who are signed up to the SCEP scheme and have seen their cows and bulls replacement indexes fall have some thinking to do about how the changes affect them. Now is a good time for these farmers to recap on how the SCEP scheme works and how and when the penalties are applied if the targets are not met.

SCEP

The requirements of the SCEP scheme are split into 5 actions, each of which are worth 20% of the scheme payment. These actions are:

1. Using Eligible stock bulls/Eligible AI (4/5 star)
2. Female Replacement Strategy (4/5 star)
3. Genotyping
4. Weighing and Submission of Weights to ICBF
5. Calving Details and Surveys

Only actions 1&2 are influenced by the star ratings. Also, the changes to the indexes will not hugely affect compliance with action 1 as stock bulls that were scheme eligible at the start of the scheme will remain eligible.

Female Replacement Strategy

It is action 2 (female replacement strategy) where certain farmers could find compliance trickiest. Meeting this target could require investment and in cases might not be practical for the farm.

To get a full understanding of the importance of hitting the female replacement targets, you need to be aware of the money that will be forgone and the penalties that will apply if the targets are not met. The SCEP terms and conditions outline this as follows for the female replacement strategy:

• If the 50% target in 2023 is not met, 20% of the SCEP payment for that year will be lost. An additional penalty of 10% of the total SCEP payment will also be applied
• If the 65% target in 2025 is not met, 20% of the SCEP payment for that year is lost, plus a penalty of 30% is applied
• If the 75% target in 2027 is not met, 20% of the SCEP payment for that year is lost, plus a penalty of 50% is applied.

As there are no targets for the female replacement strategy in 2024 or 2026, the farmer will receive 100% of their SCEP payment in these years with no penalties applied, assuming that they are fully compliant with the other 4 actions of the scheme.

When this scenario (where the herd is compliant with all aspects of the scheme except the female replacement strategy) is modelled out using a herd with a scheme reference number of 20 cows, the farmer can still expect to receive €12,660 over the course of the 5 years from the SCEP scheme after reductions and penalties are accounted for. This is a reduction of €2,340 from the €15,000 the farmer would have received if they were fully compliant with all 5 requirements of the scheme for all 5 years.

The preferred scenario is to be in a position where you are fully compliant with all the scheme rules, and all farmers entered into SCEP should be aiming for this. For those who find themselves in a position where major changes are needed to the herd to meet the scheme requirements, it is worth knowing what you will be penalised if you fail to hit certain targets and that there is a point for each farmer beyond which the changes required become either uneconomical or unworkable.

Other clauses

Other clauses of the scheme have the potential to disqualify you from the SCEP entirely if not met, resulting in far greater financial losses than what non-compliances with the female replacement strategy would deliver. These include:

• A valid BISS application must be submitted for the farm each year
• The farm must be a member of the Bord Bia SBLAS scheme for the full duration of the SCEP scheme
• At least 50% of the herds yearly reference number must be calved on farm each year
• The SCEP training course must be completed before 15^th November 2024

Also read: Don't forget to record SCEP Survey Data

Also read: What will the changes to the breeding indexes achieve?

Also read: Explainer: Changes to the Terminal and Replacement Indexes - why are they required?

Also read: Chasing cost reductions through breeding - the role of the updated Replacement Index