Hopeful signs for beef in 99
By FWi staff
IT is tempting fate to say things cannot get any worse if you are a beef farmer, so the sensible money is predicting more of the same in 1999.
But at least the signs are now hopeful. Domestic consumption is expected to return to within 1% of pre-BSE crisis levels, helped by the confidence-boosting effect the export bans lifting will have on the home market. People who turned their backs on beef may think again in the face of news that British product is back on European menus, says the Meat and Livestock Commission.
Overseas trade, though, is likely to be modest, with just 220,000t likely to go abroad in 1999. This recovery is likely to begin in the farm-assured, high-quality, catering sector with France, Italy, Belgium and the Netherlands among the target countries.
But Great Britains competitive position will be hit by Sterling, which, while having weakened in 1998, is still relatively strong against historic levels.
Cattle supplies are likely to rise slightly to 2.25 million head in the coming year and this, together with the low prices of competing meats, will frustrate farmers hopes of an upturn in price. It is difficult to be anything other than cautious, says the MLCs Duncan Sinclair, who reckons average finished values will be between 80p and 85p/kg liveweight, a fall of about 10% on 1998.
Another big factor in the equation is the collapse of demand from Russia, a market upon which Europe was traditionally heavily dependent with 41% of EU exports heading there in 1997. The result has been to leave big tonnages of EU beef looking for a new home.
Against this background of lacklustre prices, farmers must tailor production even closer to market demands, says the MLC. This should be remembered by those tempted to rear black-and-white bull calves after the calf slaughter scheme disappears in March. Such beasts will tend to be at the lower end of the quality spectrum, grading O- or P, and a 20p/kg discount compared with the average could be seen. Only rear them if the figures stack up, and secure an outlet before you even start, is the MLCs advice.
The slaughter scheme is expected to account for about 150,000 bull calves in the first three months of 1999 when it is operative, a big drop on the 650,000 in 1998. Another 168,000 animals many of them subsidy-ineligible heifers will also probably be killed as bobby calves.
Technical improvements and tighter cost control must also be pursued. There is still work to be done, says the MLC. And producers should also ensure that they are maximising subsidy claims.
Numbers heading into the over 30-month scheme are expected to fall about 3% to 800,000. The 1000 prime cattle a week it is now taking, though, will decline, as more heifers finish with passports and farmers question the sense of taking stock beyond its sell-by date to get the 62p/kg cull compensation in preference to the open market value.