5 September 1997

UK beef facing elimination from intervention

By Philip Clarke

A COMBINATION of slightly improved finished cattle prices and the recent revaluation of the green £ means that UK beef could soon be ineligible for intervention support.

The system works by converting deadweight prices for each grade of carcass into R3 equivalents, which Brussels then converts into ecus. If this ecu rate is more than 80% of the intervention price (currently 347.5 ecu/100kg), then that grade may not be tendered for intervention.

The problem is that, since the revaluation on Aug 21, each p/kg of carcass meat in the UK converts into more ecus in Brussels.

Tipped over threshold

As FW went to Press on Wednesday (Sept 3), the Meat and Livestock Commission confirmed that O grades had tipped over this 80% threshold for the second consecutive week and could be eliminated from todays (Fridays) intervention tender.

Other grades are expected to follow soon, with Rs also breaking the 80% threshold for the first time on Wednesday. But these categories are less dependent on intervention, says MLC economist, Jane Connor, as they can find markets elsewhere. "With Os triggered out, we can expect to see little use of intervention in the coming weeks."

This is confirmed by abattoir owner John Dawkins from Congerstone, Warks. "I wont be doing any for intervention, as I would have to kill so many just to get a few Rs. It is not worth the risk."

Severe scalebacks

The significance for farmers is less than it might have been a few months ago, however. In May, almost 3000t of steer beef – equivalent to about 8000 animals – was going into intervention every two weeks. But the most recent tender saw under 1000t accepted from GB after severe scalebacks.

"There is less dependence on intervention at the moment, as cattle are in short supply season-ally," says Mrs Connor. This is likely to continue into the autumn as the effect of the calf processing scheme, which got under way about 18 months ago, is felt on the domestic market.

The one problem will be if Irish imports accelerate once their cattle come off grass. This could hit prices again, in which case intervention would be switched back on. &#42