THE effect of cuts in OTMS compensation will be more wide-ranging than simply slashing the returns of those putting stock through the scheme.
Both beef producers and dairy farmers say the reduction in returns from cull cattle will mean they will need to source replacement stock for less.
And both sectors predict that farmers will hang on to cows a little longer than they otherwise would, leading to an increase in the age profile of the national herd. Belts will also have to be tightened to reduce input costs.
Off balance sheet
Richard Fuller, who manages the beef herds at JSR farming groups Givendale Farm, Pocklington, East Yorks, says the OTMS changes will wipe £15,000 from his balance sheet overnight.
He runs a herd of 100 pedigree, high genetic merit Charolais alongside a 100-strong cross-bred beef herd.
"Im appalled at the cuts, which, I assume, are Treasury driven. Our Charolais cows would average about 800kg at slaughter. Before March, 1996, we averaged about £930 a head for them and now we face getting £600 less for each animal," he says.
The changes will limit cull cow prices to £323, while £363 will be the maximum payment for steers, heifers and bulls.
Mr Fuller normally replaces 20 cows a year in the pedigree herd, so stands to lose £12,000 there. The cross-bred culls averaged £480 before the BSE crisis, and the new rate will wipe £150 from that. "Again, taking out about 20 cows a year, we stand to lose £3000 at a stroke," he says.
The total loss of £15,000 is equivalent to a stockmans wage he adds. "It really is very serious. Beef is now becoming unprofitable."
As well as calling on government to reverse the OTMS cuts, Mr Fuller believes there is an urgent need to allow over-30-month-old beef cattle back into the food chain.