Beef reforms spell change
By Jessica Buss
BEEF producers may have to consider their stocking policy carefully in light of EU beef reforms announced last week.
These proposals could reduce the UK ceiling on beef special premium (BSP) claims, lower stocking rates and require compulsory inclusion of heifers in 2003 suckler cow premium claims. While these proposals are being finalised, MLC beef economist Duncan Sinclair advises waiting before making any changes.
However, he believes there are a few options for complying with the reduced stocking rate of 1.9LU/ha next year and 1.8LU/ha in 2003, compared with the current two livestock units/ha (see Business).
"It is possible to keep the same number of cattle and not claim subsidy on them, when only claiming BSP and Suckler Cow Premium, under the requirements of the scheme."
However, ADAS senior consultant David Morris believes that keeping stock without claiming subsidy is difficult to justify. "Subsidies are an important part of the gross margin for both sheep and cattle enterprises."
Mr Sinclair explains that these economic implications have encouraged many to increase forage area to meet stocking density requirements in the past. "One option is to claim on the same number of animals as before and either rent or acquire more forage area. This area must be submitted on IACS forms next spring."
However, on mixed livestock units, which claim two or more of the BSP, suckler cow or sheep annual premium (SAP), it may be worth reconsidering the balance between the enterprises.
"It may be worth reducing stock on one enterprise and increasing it on another or selling a proportion of sheep quota to meet the new stocking rate limit."
Mr Morris adds that achieving the best balance between enterprises may be difficult to quantify in terms of profit, particularly on hill farms. The profit when running a single enterprise may work out similar to mixed stocking. "But mixed stocking spreads risk. There are also environmental and animal welfare benefits of mixed stocking and it can help spread the farms workload."
Many hill farms have been encouraged to keep more sheep in favour of cattle, because of high wintering costs of cattle with high straw prices and increases in sheep headage payments, adds Mr Morris. Ideally, he would prefer these units increase the proportion of cattle to redress the balance and to reduce stocking density.
"Many producers planning restocking post-foot-and-mouth want reduced stocking for a more manageable system and to allow diversification." However, reducing stocking density usually fails to improve quality of stock enough sufficiently required to offset losses in subsidy, he warns.
Another new rule, which will mean changes on some units, is the compulsory requirement for 5% of the suckler cow premium claimed to be heifers in 2003. Due to losses of suckler cows from F&M, this is much lower than the 15% in other EU countries from 2002, but the requirement should be met easily by most producers, explains Mr Sinclair.
"Many suckler units have become more self-contained in their breeding strategy since 1996 due to BSE concerns and will have their own heifers. Others buy in bulling heifers which can be claimed on.
"There are a number of lowland suckler herds which buy in replacements. But these perhaps tend to finish heifers between 18 and 24 months old which can be substituted in suckler premium claims, providing they are at least eight months old and of an eligible beef breed, and then finished.
That only leaves those buying in replacements with calves-at-foot and selling all offspring as suckled calves without heifers available to claim on, says Mr Sinclair. But with only 5% of the herd required as heifers, he believes it will not be too difficult to adjust in order to meet the requirement by 2003. Rules for 2004 and beyond will depend on the Agenda 2000 mid-term review in 2003. *
• Reduction in stocking density.
• Rethink stock numbers.
• Evaluate enterprise mix.