AUCTIONEERS
AUCTIONEERS
COMMENT
MARKET
Chelford Market
AUCTIONEER
Roy Waller
(Frank RMarshall &Co)
A DECISION on the future of the calf processing aid scheme was expected at the Royal Show, and since its demise was announced some calf prices have slipped, giving an indication of what is likely to happen in the future.
As a senior auctioneer at one of the largest calf markets in the country, I feel disappointed that at no time were we (auctioneers) consulted as to what might happen with the schemes introduction.
It has distorted the market for calves and personally I am against anything that artificially influences prices outside that of supply and demand. However, for many of our customers the scheme replaced income from calves which were exported before the ban came into being.
The scheme had its faults. The difference in payment for Continental bulls and dairy types increased the number of black-and-white beef crosses overnight. A two-tier pricing system should not have been introduced.
Likewise, the age restriction at one time only allowing calves between 7-10 days old to be entered on to the scheme via the auction saw 95% of eligible scheme calves being born on the same three days each week.
More recently, the last three weeks have seen trade affected as calf buyers have held back from the ringside in anticipation of lower prices.
Looking ahead, the best Continental bull calves will still trade between £140-£180; medium sorts between £90-£120; and poorer bulls at £80. A lot will depend on conformation and breed. For example, Mondays (July 26) trade at Chelford saw Belgian Blues as the top 10 bulls and also eight of the top 10 heifers.
Dairy types will suffer with only the top 5% in quality terms making over the scheme. Medium sorts will be £20-£30 and the majority of Holstein types back at £6-12 a head.
What will help prices stabilise is a quick end to the harvest. More producers will then be looking to fill sheds with cattle for the winter. If it is drawn out then these predictions could be put off track.
For those producers who have been receiving £47 on the scheme, future prices may be unwelcome. But from an auctioneers position, standing in the middle of calf vendor and finishers, the removal of price support will allow the market to recover to its natural level quickly.
Market forces will determine some calves futures: If tagging at £3 a calf, haulage and market commission at £7 a head and the proposed introduction of a passport charge also of £7 each are taken into account, where market prices are lower (than costs of £17) the poorest types will be left to sink or swim. That leaves industry to decide what to with them to avoid a welfare problem.
Ultimately, calf prices are determined by the beef trade and returns are not what they were. Its surprising that the present calf trade follows current beef price (92p/kg) and not what these animals are likely to be fetching in 12-18 months time. But who can forecast that?
Whatever happens, it is the auction system that will set the price. *
There has been resistance to purchase some calves ahead of a predicted price slump and values have dipped, says Roy Waller.