15 September 1995

MLC SAYS LOOK AT ALL THE OPTIONS

WITH the future of the calf trade still unclear, producers must study alternative rearing systems.

This will be the advice of Meat and Livestock Commission beef strategy manager Chris Brown at the Dairy Event. The alternatives he advises are:

&#8226 Cereal beef.

&#8226 Veal production.

&#8226 18-month beef.

MLCs costings are predicted in the tables opposite for either a no-export scenario, or 50% and 90% volume on current trade. But, whichever system is preferred, it will be useless to consider it without first securing a market outlet – especially for veal – warns Mr Brown.

With no calf exports Mr Brown predicts market prices would drop to £50 a head. "If exports fall to 50% of present capacity, all breed prices would be about £100," he says.

He feels the most likely long-term scenario will be 80% of current volume sold abroad. Then prices would reflect 90% of todays value.

The future strength of calf exports is dependent on a number of factors. One is the current judicial review brought forward by the RSPCA and Compassion in World Farming. These groups are challenging the UK governments interpretation of the Treaty of Rome. They claim the government can prevent calf exports unilaterally. If their claim is successful, there is a potential trade barrier, says Mr Brown.

Another issue to consider is ferry operator Stena Sealinks possible purchase of Dover port. "As Dover port is a public utility, calves can still be exported from there. But, if it is privatised, Stena Sealink could follow its policy of refusing live exports," says Mr Brown. The current discussions on flying calves from an airfield in the Midlands could also influence the calf trade.

The main Dutch buyers, such as Nekro, have also been applying market pressure. They tried to reduce slaughtering capacity by 15% at the beginning of the year, claiming demand for veal had dropped. Mr Brown believes this was just a campaign to force calf prices down. "But when that happens, the independents can then afford to trade so prices do not bottom out. Even if the volume of exported calves drops by 10%, there will still be 400,000 leaving the country – which is a colossal number of calves."

To protect themselves against a potential loss of income, Mr Brown recommends dairy farmers use more beef AI across the herd. "The number of dairy inseminations is still high, compared with three years ago. The ratio now stands at 70:30 dairy:beef, against 60:40 previously."

Some producers may be able to gain an extra margin by finishing their calves. This option applies in particular to cereal producers. "Cereal prices are supposed to fall," says Mr Brown. "Although there is little sign of that at present, farmers would be introducing this system a year on by which time there might have been a change."