Beef sector faces meltdown over 'unrealistic' prices

Retailers were warned yesterday not to expect current supplies of beef to continue to come on to the market unless there is a rapid upward surge in the prices paid at the farm gate.

Leading the charge, National Beef Association director Kim Haywood said: "Beef cannot be produced in the UK at current volumes in future unless there is a quantum leap in farm income."

She added that all the signposts in the industry were pointing to a position where the world has no spare beef while at the same time it was abundantly clear that more people would be demanding to eat beef.

She described the current valuing of beef as "corporate myopia" over persistent in-store under-pricing and warned this could result in the domestic beef industry being almost totally dismantled if the majority of farmers were forced, through persistent loss making, to give up production. "That time has arrived," she claimed, "at almost exactly the same time that surplus beef on the world market has vanished. So if retailers do not move quickly, and accept there has to be an immediate, and dramatic, lift in ex-farm cattle prices, they will either have to manage their businesses without beef or assist, later, in the re-construction of a domestic production chain that has been unnecessarily dismantled."

Concentrating the mind of the NBA is the rise of more than one third in farm fuel costs over the past 12 months, coupled with a doubling in world wheat prices and a 50 per cent lift in the cost of one of the main ingredients of fertilisers.

"A critical point has been reached. Breeders, almost to a man, are saying they cannot continue unless they earn more from the market and finishers have made it clear that unless slaughter cattle prices rise dramatically they will not be able to pay more for suckled calves and store cattle," said Haywood.

She pointed to Argentina as one of the main world producers of beef where producers sold their cows after trading unprofitably and said the same could happen here.

"It has just been confirmed that in January there was a 44 per cent, year on year, leap in British cull cow disposals," she said.

"This justifies fears that if there are no radical improvements in domestic prices a huge proportion of the UK's breeding herd will take the same route as the Argentine herd already has done, and be sent to the abattoir and not to the bull this summer."