Hopes rise as OTMS falls
BEEF INDUSTRY leaders have welcomed news of an end to the over-30-months scheme, but warn timing will be critical to avoid a glut of cattle depressing beef values.
They also want a speedy resumption of bone-in beef exports to follow the OTMS” demise to help clear the market.
The government announced last week that the scheme will be phased out and replaced by BSE testing. OTM beef (born after Aug 1, 1996) is likely to re-enter the food chain between July and September 2005.
Figures released by the Meat and Livestock Commission show that beef volume could increase by 75,000t in late 2005, and by 185,000t, or 25%, in 2006.
Peter Hardwick, the MLC”s international manager based in Brussels, said cow beef should be able to displace much imported manufacturing beef. “The possibility is that we can push out more imports than expected, but we must optimise the price.”
He said DEFRA understood how important it was to minimise the delay between the end of OTMS and the re-opening of exports. But an October/November end to the date-based export scheme was “the best we can hope for”.
Robert Forster, chief executive of the National Beef Association, said: “The industry shouldn”t scare itself. Some people are panicking unnecessarily.”
Europe faced a beef shortage and manufacturing meat prices were forecast to rise by 8-9% next year, he said. “Of our total import volume, 175,000t is manufacturing beef – which will be open to substitution (by domestic supplies) once OTMS is removed.
“The price in the Republic of Ireland for older cows is 120-130p/kg deadweight. It”s pretty reasonable to assume we can come in underneath that, and we”re confident of selling well above 89p/kg (the current OTMS compensation rate).”
A firm date was needed, he said, and one preferably before September. But he advised feeders and finishers to manage their cattle marketing carefully to avoid flooding the market at that time.
Kevin Pearce, NFU chief livestock adviser, said a July date would be easier to manage. He also said careful marketing of cattle was the key to minimising any disruption the return of older beef may bring. “Once a date is announced, people can plan better and phase them in. The introduction of OTM beef should not affect the prime cattle price.”
A spokesman for Anglo Beef Producers, Britain”s biggest prime beef exporter before the 1996 BSE crisis, said that cow beef should displace imports to some degree. “But it”s absolutely vital we get the export market re-opened as close as possible to the end of OTMS.”
Chris Dodds, executive secretary of the Livestock Auctioneers Association, agreed, saying the proposed date for allowing cow beef back into the food chain coincided with the marketing peak for prime cattle.
If a glut of cow beef did hit the market in September 2005, and failed to displace imports, it could wipe 10p/kg off beef values, he warned.
“We need an export market running side-by-side with the re-introduction of cow beef, and to recommence hindquarter exports to France in particular.”