2014-01-17   facebook twitter rss

National Beef Association Beef Industry Update

Chief Executive of the National Beef Association Chris Mallon gives an update on Beef Industry.

In 2013, the cattle industry had a better than average year, in no small part of course, aided by the discovery of horsemeat in processed meat products which led to consumers demanding British.

Chris Mallon

Chris Mallon

The year also had the benefit of one of the best summers in a long time. Although trade tailed off slightly towards the end of the year on for most of the year we saw good prices for all classes of stock. 2013 I am sure will be seen by most as one of the better years.

But just as “one swallow doesn’t make a summer”, neither will one good year on its own bring back cattle numbers. The industry needs stability and long-term profitability before we see reinvestment and growth in numbers.

Beef cow numbers are falling and the demand for high provenance locally sourced beef is rising so the simple law of supply and demand should lead to an increase or at least maintenance of the price. This will of course be dependent upon processors and retailers backing British and committing to the future stability of the industry.

The recent price weakness has been blamed on imported European beef from Poland entering the supply chain into the catering and processing markets. The concern always with such beef is its traceability, welfare standards and is it exactly what it purports to be.

At the end of 2013 the settlement of Pillar 2 CAP transfer from Pillar 1 was decided with the UK areas having different rates and different rates across the EU, Scotland has come in at 9.5%, Germany 4.5%, France 3%, Wales 15% and England 12% with the last minute debacle of 0% in Northern Ireland.

Taking money from the farming community when there is no clear idea how the money will be spent whilst at the same time putting British farmers at a competitive disadvantage makes no sense. In the wake of the horsemeat scandal, we know that the British public wants to see more British food produced. If rural communities are to remain living habitable areas for people as well as wildlife, farming needs the support it deserves. The funds in Pillar 2 need to be readily accessible to farm businesses and not allowed to be squandered on unsustainable, uneconomic, novelty ideas that do not truly benefit rural businesses.

The hope is that all in the beef supply chain can make a living, when we get that balance, long-term investment becomes possible. 2013 saw a rise in confidence amongst beef producers which was perhaps the catalyst for the start of growth in suckler numbers.

However, a serious fall in price for finished animals would be disastrous for the industry and for many producers it would be the last straw. This would lead to a major fall in numbers, the closure of processors and result in British retailers and customers relying more on imported meat. Processors may wish to bring back the beef price, but it will end with one long-term result, no cattle to process.

Growing the suckler herd is actually easy, it needs to be one thing, profitable. The store producer needs to make a living along with the feeder and I am very pleased that recently we have seen this happen. Processors are also working on slim margins, and we need them to be strong. Processors need to pay a price that allows the feeder to have a margin.

The Economics, profitability of a suckler herd is directly related to the number of calves reared per cow served annually. Recent figures show that the average calving interval for suckler herds in the country is 406 days which is somewhat off the target of 365 days. A cow that does not calve every 365 days is a drain on the system and not earning her keep. This means that in a 100 cow suckler herd the average farmer is weaning 79 calves from 100 cows whilst the target should be more like 95 live calves per 100 cows.

It has been shown in the past that it costs between £350 to £600 to keep a suckler cow for the year depending on land type and whether the cow calves in the spring or autumn. It is therefore essential that she produces a calf every 365 days to deliver an output which will cover this expenditure and produce a profit.

As everyone knows, some disease and health issues are difficult to control such as TB. However, disease such as BVD and fluke can be managed and savings made for the suckler producer. Identification and eradication of PI’s within the herd is key to BVD management, with estimates of £100 per cow being the cost of BVD within the suckler herd.

Cow management is within our control but the sale of the end product is in the hands of others and if they wish to stay in the business of processing beef it is in their own interest to pay a price that ensures their suppliers remain in business. Threats of bringing in cheaper imports only succeed in reducing farmer confidence and prevent growth in the beef sector. We need aggressive promotion of beef by retailers and continued support of high provenance British beef.

NBA

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