"There is some anticipation as to how things will work out when the Older Cattle Disposal Scheme (OCDS) starts on Monday for animals born prior to August 1996, Duncan Sinclair at MLC Economics and Policy Analysis Group told the Journal. Market stability could be threatened, he said.
The National Beef Association has warned that abattoirs across the UK are using the ending of the OTMS as an excuse to pull down prime cattle prices - even though supplies of finished stock on farms are tight and chill room beef stocks are low, according to the National Beef Association. It describes the long-predicted move as "inevitable" and recommends it should be dismissed by finishers as a trading ploy rather than a genuine reaction to market forces.
"Many slaughterers are looking for a chance to knock back prices and one of their habitual ploys is to create the impression of a falling market because this can persuade finishers to rush cattle forward before they are hit with further income losses," said NBA chairman, Duff Burrell.
"However finishers should demonstrate their refusal not to be panicked into selling cattle at the wrong time by keeping as much stock as they can off the market until the processors' bluff is called."
According to the NBA many slaughterers will protest that the appearance of more cows, especially dairy cows, on the commercial market from Monday will put pressure on prime cattle forequarter values.
"Decoupling has made realistic market returns imperative for the beef sector and the only reason to bring cattle forward is to generate sales income now that slaughter premium, and all other direct subsidies, have been consigned to history."
"Huge losses are still being made at current prices so a further drop in price threatens long term production and supply sustainability - and abattoir owners should be aware of this."
Scottish processors have serious concerns about the ending of OTMS, according to Alistair Donaldson, chief executive of the Scottish Meat Wholesalers Association. "There is a big concern that there will be no support scheme until there is total market collapse and then Brussels will consider a support mechanism." he said. "Post CAP reform prices are under pressure and the last thing we need is a reduction in production which will lead to a price collapse and affect producer confidence. We need orderly marketing of good fleshy cows to meet the home market specification." Norman Bagley, Policy Director for the Association of Independent Meat Suppliers, believes there could potentially be significant problems now until the reopening of exports. "The market is softer in January and with twice the number of cattle 6,000-7,000 a week coming onto the market there will be price pressure."
Peter Scott agrees that there will be too many cattle on the market with the ending of OTMS. "It is all a matter of supply and demand and if the price is right hopefully the home grown produce will displace imports."