Retail sector should realise that decoupled subsidy transition is....

Decisions by prominent retailers, and their suppliers, over the price paid in the early part of the New Year to UK feeders for their finished cattle will determine whether the national cattle herd remains stable, or shrinks heavily, over 2008.

So says the National Beef Association which is warning that the transition from coupled EU subsidies, which ended in 2004, to a support free regime, which is to begin in 2013, is approaching its critical mid-term stage.

 “The European Commission’s plan is for farmers to become entirely dependent on market income and to have succeeded in building businesses that no longer need additional financial support for their survival in as little as five years time,” explained NBA director, Kim Haywood.

 “This coming year the transition process tightens its grip through even heavier reductions in Single Farm Payment (SFP) and farmers can only move their businesses forward if this is immediately compensated by additional income at market level.”

 “If the latter is not forthcoming, which would mean that incomes will shrink at a time when costs, which are already substantially higher than market income, continue to increase then the beef industry will move rapidly into a period of radical review.”

According to the NBA a number of scenarios will be urgently examined. These will include whether it is possible to earn more income selling breeding stock, which would otherwise be producing calves in the UK, to developing countries on either side of the EU’s eastern boundary.

  Or whether it makes more sense to direct a higher proportion of cattle towards specialist processors who intend to concentrate on selling more high specification carcases, and cuts, onto the increasingly undersupplied EU market?

Or even deciding if it is time to drop out of beef production and embrace cereal or dairy farming following positive prices developments in those sectors after their markets responded to obvious shortfalls between national output and increased consumer demand.

“Most beef farmers are bewildered by the current poor response from many of the main players in the domestic industry who seem ready to insist on continuing to buy cattle for less than the cost of production instead of making constructive moves to ensure they will be able to continue to enjoy adequate supplies of UK produced beef in the period when the current EU policy programme moves into its final stages,” said Ms Haywood.

“Current support from Waitrose, M&S, Morrison’s, Tesco and McDonalds is greatly appreciated.  

 “Unless breeders and feeders are encouraged to stick with producing beef for the UK market by higher prices in 2008 they have no options in front of them except to see if they can earn more money selling to other customers – or else pull out of beef production altogether.”

“It is the NBA view that if the latter happened it would only be a matter of months before demand for UK cattle began to rise dramatically because retail suppliers had belatedly discovered that rising world demand for beef had created the same short market that has recently forced through important rises in cereal and dairy product prices.”

For more information please contact:

Kim Haywood, NBA director.     Tel 0131 336 1754