NI meat leaders meat crisis warning
Published:  29 September, 2006

The meat sector is "drifting into oblivion" and supermarkets could soon find themselves with empty shelves unless rewards to farmers improve, was the stark warning from Northern Irish meat leaders.

Despite some reports of "rocketing" beef prices, David Rutledge, chief executive of the Livestock & Meat Commission, said the change in subsidy systems, along with the poor prices paid to farmers, meant that many producers could soon feel there is no option but to pack up.

"What is happening across the UK and EU is that livestock production is declining. Our job is to try and make industry face up to some of these challenges. If we continue the way we are, we're going to see empty shelves in the supermarkets."

LMC chairman, Owen Brennan backed theview that the situation was challenging."LMC has concluded that at farm gate level, if we assume that farmer's drawings from their business equated to the basic agricultural wage, the Northern Ireland beef sector lost £125m. Clearly the situation is unsustainable," he said.

Rutledge said the step change in the subsidy system meant that farmers no longer needed the animals to get their subsidy, and if prices were not enough to cover costs, there was no incentive to produce beef. "Livestock must be profitable for people to farm them. We seem to be drifting into oblivion. If there is not a change in price or reward to farmers then [the decline in production] is inevitable."

Stephen Rossides, head of policy at the MLC, said the situation was challenging, but there was a future: "Producers are up against the wall in general, and some simply aren't going to make it in this new world."

However, he points to the fact there is still considerable room for improvement in much of the industry when it comes to efficiency. "At farm level, the difference in performance between the bottom third and the top third is enormous. There are clearly improvements that lots of producers can make."

He points to early finishing of cattle as a major way to save costs. Under the previous subsidy system it paid farmers to hold onto cattle longer, but with an end to production linked subsidy it is now more efficient to finish animals earlier.

It is not all down to improved efficiency either, he added: "The other side of the equation is fair returns. Supermarkets have to start paying fair prices which cover the costs of production."

Prices have been more encouraging this year, he claimed. "According to last year's figures, all production systems, once you strip out subsidy, made negative net margins. However, this year, prices have improved so we hope the figures will be better, but it's a tough challenge and we have to be realistic. There's a future, but its not going to be easy."




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