Reason for optimism in beef sector

THERE has been a degree of despondency in the beef-fattening sector in the past six months as the end price for their cattle has slowly dropped in value.

Reasons put forward for this decline have included the current recession affecting the purchasing priorities, with consumers heading down-market to save on their food bills.

However, yesterday, Stuart Ashworth, economic and statistics guru with Quality Meat Scotland provided another reason: "We have forgotten what happened 18 months ago. Because of the outbreak of TB, the export trade in live calves was stopped," he said.

The result, according to Ashworth, is that many of the about-to-be-exported calves were kept and fattened and it is these extra animals, mostly in the dairy areas of England, that have been overloading the market.

It had been difficult to pick this up because the figures from Scottish abattoirs actually showed a decrease in cattle throughput. It was only when he looked at statistics from England, where there has been a 3 per cent increase in slaughtered cattle in the first quarter of the year, that it became apparent what had happened.

He said he expected this increase in numbers to slip back into normality in the coming weeks and the good news for producers will be that he was cautiously optimistic that the price of finished cattle would thereafter pick up.

"By August or September, we should see an end to this surge of stock coming onto the market and I am sure the supplies of beef will tighten up considerably," he said.

However, the size of the suckler herd in England has been in a slower decline than in Scotland, dropping by 3.5 per cent since December 2005 compared with a 7 per cent fall in this country over the same period.

Part of the reason for the lower rate of reduction in England, he said, related to the shift from dairy to beef that seems to have taken place south of the Border. The English NFU also believe that their area-based subsidy system has also helped keep more cattle on farms than has been the case in Scotland.

Despite these adverse issues, there is still a premium for Scottish beef producers, with consumers still prepared to pay extra for meat with a Scottish tag.

In presenting the annual report on the state of the red-meat industry in Scotland, Ashworth also commented on the tightrope that processors are now walking with reduced throughputs and increased costs.

In 2009, the number of cattle slaughtered in Scotland fell by 1.3 per cent and, even though turnover has increased by 7 per cent through higher values, the industry was described by him as "not having its troubles to seek" through increased costs and downward pressure on the end price.

The reduction in the numbers of animals for processing "is rightly called the biggest single challenge facing the industry," he said and it was one where if any part of the supply chain of cattle, sheep or pigs reduced any further then it would make the processing sector vulnerable.

Ashworth expressed his concerns over the major effect that currency swings can have on his predictions, saying he seemed to spend more and more time nowadays as a currency speculator.