23 May 1997

30% beef subsidy cut suggested to reduce production

BEEF production must be discouraged with a 30% cut in subsidies to counter oversupply.

That is the opinion of MAFFs head of beef and sheep division, Richard Cowan, who told beef producers at an ADAS organised conference in Launceston, Cornwall, that low beef prices were not attributable to BSE alone.

"If this was the sole reason for the weak price there might be hope of eventual recovery," said Mr Cowan. Instead, he said the root cause was a beef surplus within the EU which successive CAP reforms had failed to tackle.

"In the past the EU has been able to sell subsidised surpluses to Third countries. But the 1995 GATT round limited the amount of beef which could be subsidised. In the next round, pressure will be on the EU to eliminate subsidies completely," he explained.

The EU cannot, therefore, continue to put beef into storage, because it may not be able to dispose of the surplus in the future. According to MAFF forecasts, this build-up could lead to 4m tonnes of beef being amassed by 2005, four times the previous record level.

"Clearly this cannot be sustained, and while other EU countries are in favour of sustaining support, our government believes that the EU must make significant cuts to reduce production.

"In my opinion about a 30% reduction in intervention price phased in over three years would be suitable," said Mr Cowan.

Compensation would then have to be paid to sustain businesses. But this compensation would be degressive and limited to a three- to five-year period.

Commenting on these suggestions, Devon-based suckled beef producer Richard Haddock said: "There is nothing new here. What is needed is specialist beef producers, not dairymen, to get together and sort out a plan to allow those in trouble to go out with dignity and their assets intact."

Among his suggestions are:

&#8226 A voluntary suckler cow and quota buy-up scheme.

&#8226 A retirement scheme for those wishing to get out altogether.

&#8226 Compulsory slaughter of purebred dairy bull calves.

&#8226 No beef special premium on dairy-bred beef.

&#8226 Encourage traditional breeds with smaller carcasses.