It cannot get worse for beef – can it? – FWi REVIEW O

December, 1997

Compiled by FWi staff

ITS doubtful whether any beef farmer
sitting down to enjoy Christmas dinner this year will want to look back
on 1997 with anything more than a cursory glance.

The British beef
industry is in tatters. Producer prices for finished cattle have dropped
by around 20p/kg over the past twelve months and the much-hoped-for
lifting of the beef export ban has failed to materialise.

Meanwhile,
beef imports have flooded into the country. The defining event of the
year came in December, when frustrated farmers vented their frustrations
and blockaded ports around the country.

As the beef-on-the-bone ban
begins to bite, the only consolation is that the situation can hardly
get worse in 1998.

JANUARY

• Cattle
  prices open the new year buoyantly and hopes are high that the beef
  export ban could be lifted soon. Steers and heifers average 109.6p/kg
  with young bulls selling at about 111p/kg. The cold weather has helped
  demand, say retailers.

• The lifting of the beef ban would restore
  confidence in British beef at home and abroad, says Gwyn Howells,
  marketing director for the Meat and Livestock Commission (MLC).

  
  

• The MLC announces plans to spend £2-2.5m on retail beef
  promotion during February after statistics show UK beef consumption fell
  18% in 1996.

FEBRUARY

• A flood of cheap
  beef imports from Germany is blamed for a standstill in UK prices,
  despite improved consumer demand. Sterlings strength allows UK plants
  to source German beef at a discount of up to 10%.

MARCH

• Cheap beef imports are delaying the recovery of UK cattle
  prices, claims MLC economist Mick Sloyan. But the trade is legal and
  cannot be stopped, he adds.

• Cattle prices drop below 100p/kg for
  finished steers as pressure from imports and reduced intervention buying
  takes its toll. Economists predict a 9% rise in supply for 1997.

  
  

• The case for lifting the beef ban is overwhelming, says a
  cross-party committee of MPs. But the EU Commission disagrees and the
  export ban remains.

APRIL

• Beef farmers face a
  further 25% fall in gross margins after MAFF announces new rules
  requiring butchers to separate the vertebral column from other beef
  carcass bones. The costs will be passed on to beef farmers, claims the
  NFU.

• Government aid to renderers is cut from £118m to
  £59m. With beef prices as low as 88p/kg in Wales, the NFU describes
  the measures as “depressing”.

• Angry farmers ask why retailers
  have failed to react to the fall in prime cattle prices. Producer prices
  are 20% below the pre-BSE level but the price of rump steak is actually
  selling for 2.4% more than it was 13 months ago, they claim.

  
  

• Brussels accepts almost 5000t of steer beef into intervention at
  prices of up to 191p/kg. Meat traders are surprised at the volume
  accepted and beef prices rise by about 6p/kg.

• Imports of Irish
  beef into the UK have increased by 50%, according to MLC statistics.
  Overall beef imports show a year-on-year increase of 23% but UK
  consumption is still 12% below pre-BSE crisis levels.

• Beef
  farmers claim the UK market is swamped by beef from EU countries which
  do not abide by the same stringent health regulations.

MAY

• Depressed cattle prices
  look set to continue for the rest of 1997, according to the latest MLC
  report. Prices are at a 16-year low.

• At 93p/kg for steers, UK
  beef prices are the lowest in the EU, according to a Brussels-produced
  report. “Our industry is being undermined by the dumping of cheap
  imports from Europe,” asserts Scottish NFU vice-president, George Lyon.

JUNE

• McDonalds resumes
  buying British beef. Average values for all finished cattle rise to
  95p/kg. Together with other fast-food chains, McDonalds uses about 8000
  beef forequarters every week, according to the MLC. That represents
  about 1200t or 4000 animals.

JULY

• EU officials
  accuse the UK of flouting the worldwide beef ban by fraudulently
  exporting at least 700t of tonnes of British beef. NFU president, Sir
  David Naish, says he deplores anybody who dealt with the exports but
  remains confident that the issue will not affect negotiations to get the
  beef ban lifted. Farm minister Jack Cunningham retaliates with new plans
  to prevent illegal exports of British beef.

AUGUST

• Intervention limits
  mean beef prices are unlikely to rise, according to meat traders. But
  meat rejected from intervention has to be sold at knock-down prices,
  says abattoir owner John Dawkins. “Its certainly not a business you
  want to rely on,” he adds. Steers average 100.68p/kg.

SEPTEMBER

• A combination of slightly improved finished cattle prices
  and Green Pound revaluations means that UK beef could soon be
  inelligible for intervention support, warn economists.

OCTOBER

• The NFU publishes a report showing that finished cattle
  prices in north-east England are suffering from the legacy of BSE and
  the strength of Sterling.

• The situation is far from bullish in
  the rest of the country. At Exeter, the overall average for finished
  steers falls to 90.57p/kg.

• In Wales, the situation is very much
  the same. There is little sign that the downward trend will be reversed
  in the near future, says Arwyn Owen, commodities officer of the Farmers
  Union of Wales.

NOVEMBER

• Bagshaws
  auctioneers describe the cattle at one of their sales in Bakewell as
  “without doubt the worst selection on offer this season.” Prices for
  plain cattle are as low as 60p/kg.

• At Uttoxeter, prices fall to
  the lowest levels for five months. Exeter Market Auctioneers reports
  that many farmers are selling cattle rather than paying for feed over
  the winter months.

• The beef industry needs a shot in the arm,
  says auctioneer David Edwards of Shrewsbury market.

DECEMBER

• The EU suspends
  intervention for beef until at least the end of the year, arguing that
  the European market has largely recovered. But the MLC expresses concern
  that plans to sell existing intervention supplies – which total 680,000
  tonnes of beef – could have a further downward effect on prices.

  
  

• The Government announces a new ban on beef-on-the-bone. Farmers
  decide enough is enough and blockade ports around the country to prevent
  beef imports.

• Despite the extension of the beef ban, auction
  prices appear to be stable. But auctioneers warn that returns are
  inflated because Christmas Show Auctions attract top-quality cattle. The
  real effect of the new ban will only be known after the New Year, they
  say.

• About 500 farmers gather at Banbury market to draw
  attention to the crisis facing the industry. Midland Marts auctioneer,
  Ian Smethurst, tries to put a brave face on the situation. The
  beef-on-the-bone ban “was the last piece of the jigsaw and shouldnt be
  regarded as a disaster,” he says. But medium steer prices average only
  92.1p/kg.