Production costs have become beef sector's priority

The NBA claims rising production costs, not future income from finished cattle, are the big problem beef farmers must solve if their businesses are to survive over the long term.

Rising production costs, not future income from finished cattle, are the big problem beef farmers must solve if their businesses are to survive over the long term.

That is the message of the National Beef Association (NBA), which is convinced that emerging shifts in cross-global, demand-supply trends will continue to force up the value of increasingly scarce beef animals. At the same time, the NBA is worried that if the damage to profit and loss accounts triggered by soaring feed, fuel and fertiliser prices is not overcome, all the benefits to producers of the hugely favourable slaughter cattle market will be wiped out.

"Everything at both domestic and global level that could be working on behalf of the farmer, to further lift the value of his stock over 2008 and 2009, is doing so," explained NBA chairman Duff Burrell.

"The GB average for R4L steer and heifer carcases is rapidly approaching 280p and current predictions, from Brazil itself, are that even Brazilian cattle will be selling for about 200p deadweight in sterling terms by the end of the year."

He added: "It is also noteworthy that during the WTO's 2007-2008 tariff year, which ends on 30 June, Brazil and Argentina will only have been able to export enough steak into the EU to cover half of their tariff-free Hilton Quality Cuts concession.

"So it is already quite obvious that the world's beef surpluses are shrinking to the point at which political concerns, such as possible WTO tariff reductions, have become a surprisingly low priority, while fresh anxieties about input costs, which are driven by the same global forces that will take UK prime cattle beyond an average of 300p, have still to trigger a properly constructed, industry-wide, counter-attack."

According to the NBA, the imminent shift in survival focus from the still disappointing market for slaughter cattle to much tighter control of input costs puts the future of their businesses firmly in farmers' own hands.

"The farms that will prosper, at a time when courage has to be summoned to open invoices for recently delivered fertiliser or fuel, are those that quickly work out for themselves a management package that ensures the holding is carrying the right type of cows, or feeding stock, and establishes the cheapest way to keep them profitable and productive," said Burrell.

"New cost-yield optimums will have to be calculated for fertiliser application to grass, and more use made of natural manures and clover, at the same time that tractor work is planned, so that each task is judged on a cost-benefit basis and no fuel is wasted."

"More cattle have to be finished-off on grass, more substitutes have to be found to replace feed grain, more bulls have to be tested for fertility and more feeding cattle have to be prevented from going down with pneumonia."

Burrell continued: "On top of this, liver fluke needs more control, cows need to be freed of disease that cuts down on fertility, more cow herds need to be out-wintered on suitable land, and more feeding cattle have to be finished before they are older than 20 months."

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