15 August 1997

Intervention limits mean beef prices are unlikely to rise

By Tim Relf

WITH only limited amounts of beef heading into intervention, cattle prices seem unlikely to rise.

Steer meat tenders of about 1150t have been accepted at recent rounds, compared with between 2000t and 5000t earlier in the year.

Meat traders remain wary of the system, citing tight eligibility criteria and paperwork rules.

The problem, says abattoir owner John Dawkins, is that if meat is rejected, it has to be sold on to the open-market at a "knock-down" price. "Its certainly not a business you want to rely on."

Nigel Corkhill of Rose County Foods says the system can work well. "The Intervention Board is a bomb-proof customer, allowing us to plan for three-weeks work and know we will get paid."

But what makes the process a "lottery" is knowing by how much tenders will initially be scaled-back. As a result, people are applying for three- or four-times the amount required, says Mr Corkhill.

Recent smaller intervention volumes reflect a tightening of cattle supplies, partly because of the calf slaughter scheme. .

"But were it not for intervention, farm gate prices of cattle would be 10-15% lower."

Meat and Livestock Comm-ission economist Duncan Sinclair says green £ revaluations have made it more likely that, when tendered prices are converted into ecus, they are above the cut-off point and scaled back.

The prospect of another revaluation on Aug 20 means this will be even more likely in future. "But in the absence of the export market, we need every other outlet we can get," says Mr Sinclair.

Meanwhile cattle supplies are set to soon rise seasonally, putting further pressure on farm-gate prices. On Monday, steers averaged 100.68p/kg lw.