Brighter outlook for beef prices

Falling beef prices are giving producers an immediate problem, but there is growing optimism about long-term price prospects.

“All the indications for the longer-term are that beef production will not keep pace with consumption, leading to more buoyant prices for producers,” said Nick Allen of EBLEX.

Three different projections for beef prices all show a rise of between 20% and 31% over the next five years as a result of lower global supplies. [Cut this section for print**These use 2008/09 as their base and come from the Food and Agricultural Policy Research Institute, the Organisation for Economic Co-operation and Development/ Food and Agriculture Organisation and the US Department of Agriculture.***] After this, they suggest prices will ease back as output rises in response to the higher prices.

The sustainability of beef enterprises, particularly suckler herds, had been shaken by price pressure, said Mr Allen. However producers must look at these longer term indicators before taking drastic action, such as reducing numbers, which would leave the UK more reliant on imports.

Latest figures from the British Cattle Movement Service show encouraging signs that the trend of recent years for the beef herd to fall may have been reversed, with beef calf availability up 2% in Great Britain as 37,000 more beef calves were registered between August 2009 and July 2010.

More than 2.6m calves were registered, almost 460,000 of these pure-bred dairy heifers, leaving around 2.15m calves available for the beef industry, said EBLEX. Despite dairy cow numbers continuing to fall, both dairy and beef sired bull calf registrations increased compared with substantial falls in the previous year.

In England, the June census shows suckler herd numbers rising slightly, to 756,000 head, but the dairy herd which supplies half of our beef, has fallen to 1.16m. There was a 27% fall in the English breeding herd between 1990 and 2009.

Scottish cattle numbers were also up slightly on 2009, according to provisional June census results. The cattle herd was up marginally on last year to 1.83m head, boosted by a 1.5% rise in the number of beef cattle, the first rise in beef numbers for five years. This was slightly offset by continued decline in dairy cattle numbers.

Sheep numbers were down, by 2.5% to 6.75m, largely on the back of the harsh winter. Numbers of breeding ewes and lambs both fell, while there were more sheep aged one year old and over.

EU sheep meat production in the first six months of 2010 was down 7% year on year, according to data from the EU’s statistics office Eurostat. This fall is on top of a 6% decline in 2008 and 2009. Despite this, sheep meat imports into the EU were also lower, by 9% in the first six months of 2010 compared with 2009. This has led to supply shortages within the EU and contributed towards increased lamb prices, year on year, particularly for heavy lambs, says EBLEX.