21 March 1997

Beef market little better after one years misery

By Philip Clarke

ONE year on from Stephen Dorrells infamous remarks about a probable link between BSE and the human disease, CJD, beef prices are still deeply depressed.

Earlier this week, finished cattle were averaging just 98p/kg in auction rings, little better than the 94p low point seen last summer and still 18% less than pre-crisis levels.

Home demand has gradually improved. Latest figures from Taylor Nelson AGB show total annual beef consumption down 14% to the end of February. This compares with a 25% drop in the immediate aftermath of the Mar 20 announcement.

But supply is also set to increase. Despite a slow start to slaughterings in January and February (down 6% to 375,000t), Meat and Livestock Commission economists predict a 9% rise in supply for 1997 as fewer prime cattle enter the OTMS scheme.

Intervention has only partly made up for the loss of the export market in the past 12 months. Recent tenders have been subject to severe scalebacks as Brussels tries to keep the lid on stockpiles. Meanwhile, imports increased by 10% to 104,000t in the 11 months to November, with the Netherlands and Germany doubling volumes to 9400t and 2900t respectively, aided by their weaker currencies.

Against this background, the MLC sees little scope for price improvement in the coming months.

But UK beef producers are not the only ones to have suffered. "The market in Germany is still significantly depressed," says MLC export manager Richard Turvill. "Consumer health is constantly in the media. Fresh is what its all about, with a strong preference for local food."

With demand down 10%, and traditional markets like Poland and Italy taking less, Germany has relied heavily on intervention, accounting for 141,000t of the 503,000t put into EU stores since last March.

Over 8mDM (£3m) has been spent on beef promotion, with retailers using strong brand imaging – Gütfleisch (Goodflesh) being one example.

Labelling has also been part of the reponse in France, where demand is still 10% down and producer prices 12% lower, according to British Meats Paris office. But the emphasis has switched from the nationalistic Viande Bovine Français message to a new Controlled Quality Criteria logo, covering up to 20% of beef production.

Demand has been even harder hit in Italy – still down 15%.