27 March 2008

3 minute read

Europe

And the near certainty of even higher prices for slaughter cattle, now that imports into the EU from South America have eased dramatically, means it is even more necessary for the industry’s main players to accept that sub-250p averages are about to be consigned to history and radical, new, cross-industry approaches are required to take the beef sector forward.

“The key messages are that UK livestock census figures, expected to be released by Defra this Thursday (March 27th), will confirm continuation of the alarming drop in breeding cow numbers that accelerated after direct subsidy was removed in 2005 and the market for slaughter cattle failed to deliver compensatory price rises,” explained NBA director, Kim Haywood.

“At the same time continued pressure caused by the squeeze between improved genetics and quota restraints on milk production is expected to result in yet another two per cent, annual, drop in dairy cow numbers.

“And the message coming in from all directions at international level is that more production in the main exporting countries is being absorbed internally and even less beef is being shipped out to countries that do not produce enough of their own.”

According to the NBA this means domestic retailers and caterers will find it increasingly difficult to maintain their beef sales unless more effort is put into creating a sustainable supply system within the UK.

“Beef farmers have in the main refused to throw in the towel and are working hard to cope with the removal of direct subsidy, the progressive reduction of the indirect payment system that replaced it, and rapidly inflating feed, fertiliser and fuel costs, by increasing productivity, removing inefficiencies and reducing unit cost,” said Ms Haywood.

“However it is abundantly clear that current market prices are not enough to encourage production to continue at the level retailers need to sustain their sales - and so more encouragement from the market, at prices well beyond current levels, is needed.

“The requirement for more income applies just as much to the dairy beef sector as it does to suckled beef production and everyone in the UK industry should note that the dismantling of the EU milk quota regime by 2015 will without doubt result in a drying up in the production of beef cross calves from the dairy sector which account for around 40 per cent of current output.”

“If UK origin beef supplies are to be maintained these will have to be replaced by purebred Holstein-Friesian bull calves. But even though the typical –O3 Holstein carcase is currently averaging around 225p deadweight it is not yet enough to persuade rearers and finishers to increase the production of this cost sensitive type of beef and much higher prices for this type of animal will be needed too.

“There is no point in anyone, retailer or packer, pretending that further declines in the UK’s beef output can be easily countered by imports. Those coming in from outside the EU are drying up rapidly and more and more of the Republic of Ireland’s output will be needed to fill the huge beef supply gap that is developing across continental Europe,” Ms Haywood added.

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