TRADE

25 June 1999




TRADE

COMMENT

Robert Forster

National Beef Association

A CHRONIC shortage of prime cattle which could last right through to June 2000 will test the nationalistic purchasing, processing and retail policies established by the domestic multiples since the shut down of the export market and the eruption of farmer led anti-import demonstrations three years ago.

Slaughterings, which have been unusually light since the second week in March, are already slipping further and despite determined efforts by abattoirs to disguise this, both deadweight and auction prices are at last beginning to creep up.

Earlier this week some English finishers with supermarket quality bullocks were being paid 183p/kg deadweight. Although wide variations in dressing specification and killing out percentage make it difficult to compare like with like, animals of similar quality at auction appeared to be levelling out at a 188p deadweight equivalent.

Many feeders and finishers expect prices to continue to inch upwards as prime cattle numbers continue to shrink.

However, this optimism is not mirrored in the slaughter sector where anxious abattoir owners have been given a supply price by their supermarket customers and told, more firmly than at any time before, that it will not budge an inch even if cattle prices hit the stratosphere.

The view in the trade is that the multiples are not only aware that the trashing last year of 71,000 home bred beef cross and 580,000 dairy calves through the CPAS means that home-killed prime cattle supplies will be thinner than at any time in the recent past.

But there is also anticipation by finishers that the new £17 a head slaughter premium and the lift in BSPS claims made in 2000 will slim down the number of feeding cattle on offer through the October-March supply period too.

As a result retailers are determined not to get caught up in a domestic beef supply crisis. Their way out is to allow their suppliers to be squeezed between the rock of a rising slaughter cattle market and the hard place of a determined top down pricing policy.

And their trump card is the threat, either real or implied, that if their big dedicated suppliers in Britain cannot deliver the goods in either volume or price terms they will simply order more beef from the Republic of Ireland, where it is the equivalent of around 152p/kg deadweight (new EU dressing spec) or 70p/kg at auction.

Either way British slaughterers face desperate times. Weekly clean throughput is down 20-22 per cent compared with period before the CPAS was adopted and this years imports are expected to top 210,000 tonnes – or over 23 per cent of the beef eaten in Britain.

And the price pressure cork will soon be tightened by the release of UK beef onto the export market through the Date-based Exports Scheme later this summer which will include surprisingly large quantities from Northern Ireland to the Albert Heijn supermarket chain in the Netherlands.

However, abattoirs are saying that if the multiples are true to their word and refuse to pay more for their beef, there is little point in paying more for cattle and turning in a loss. Some, especially those with Irish owners, may even decide to ease back temporarily on domestic slaughtering and process and pack significant volumes of imported Irish beef instead. &#42


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