More stability for beef

BEEF PRODUCERS can expect some stability over the next six months.

But they will need to examine costs and production systems to survive without subsidies.

The first half of 2004 saw the market rise steadily, with the R4L average price breaching the 200p/kg barrier in August.

But values have remained under pressure in the past few months as many farmers rushed cattle out to claim the last £54/head slaughter premiums.

However, many in the industry believe the first six months of 2005 will bring much-needed stability to beef values.

Possible tighter supplies in February or March could even help values back to the 190p/kg mark.

Nonetheless, the next 12 months will deliver some uncomfortable certainties.

There will be no beef special premium or slaughter premium payments, leaving many farmers wondering whether they can produce economically.

Industry representatives point out that the single farm payment is not a substitute for headage payments and hope producers will not use it to subsidise the beef trade.

Many might have to, simply to survive.

The accepted pattern of beef production may also have to change. Producers no longer have to grow male cattle to 24 months to make a second BSP claim.

With better technical and marketing management, steers could be finished 4-6 months sooner, helping to reduce feeding and housing costs.

Lower cereal values will help keep feed costs down this winter, and with no time-sensitive support cash to chase, some producers might focus on improving carcass quality and better marketing techniques.

News that the over-30-months scheme is to be dismantled is welcome. But timing will be crucial.

A July end to the scheme would probably have little impact, but a September end could release 75,000t of older beef on to a market already in seasonal decline, potentially wiping 10p/kg off producers’ bottom lines.

Careful, orderly marketing of prime and older cattle should help minimise disruption.

An end to the date-based export scheme must follow as soon as possible to allow Britain the flexibility to export bone-in beef.

EU beef supplies are expected to fall again, helping to underpin the market.

Manufacturing grade beef prices are forecast to rise 5% and the net EU import requirement is predicted to rise by 150,000t in 2005.

While there is much that could affect values in 2005, it may also be the year that, finally, consigns the whole legacy of the BSE crisis to history.