9 October 1998

End of CPAS to herald a bobby calf comeback

What is likely to happen

when the Calf Processing

Aid Scheme comes to an

end? We look at the

implications for dairy and

beef producers and a

potential solution

AFTER the Calf Processing Aid Scheme ends calf prices are likely to fall to low levels, but producers should prepare budgets before deciding to rear calves.

MLC beef economist Duncan Sinclair says 13,000 calves a week currently enter the CPAS and last year more than 594,000 were processed through it – 150,000 more than the average number exported pre-BSE.

"When the CPAS ends on Nov 30, the market price security which it introduced will also go. Absence of the CPAS and the calf export market means there probably wont be the confidence to keep and finish all calves."

Mr Sinclair predicts that bobby calf slaughterings will increase, accounting for about half the calf numbers currently going into the CPAS. "The rise in the live calf export market in the early 1990s followed by the CPAS means the bobby calf market has all but disappeared through lack of consistent supply."

But when the CPAS ends, bobby calves will be used in processed meats, pet food and veal production, while the market for calf skins is worth £5-£6, he says.

"The bobby calf value will probably set the market base price, while better quality calves are more likely to be reared. Industry indications are that the base calf price will be £10-£20."

Heifers which are not required as herd replacements will account for a high proportion of bobby calves, while the offer of Beef Special Premium means more male calves are likely to be reared, he predicts.

"Male calves born after Nov 30 and retained for rearing are unlikely to be slaughtered before Dec 1 1999. When Agenda 2000 is agreed in its current form – where the BSP increased as of Jan 1 2000 – we are unlikely to see these animals coming on to the finished market until 2000."

In effect, that means beef producers are unlikely to see any effects from CPAS closure until 2000. By then we may also have a date-based export scheme, which will reduce effects of increased cattle slaughterings, he says.

"However, where producers are considering rearing calves it is imperative to budget first. Most of these animals will only achieve low carcass grades – O and P – and will, therefore, be subject to considerable price discounts.

"The potential margin depends largely on calf price, and their end price will be a good deal less than average, so it is essential to budget carefully before rearing them to ensure that a margin can be made," urges Mr Sinclair.