NBA warns prices must rise if industry is to survive

Retailers must give consumers a chance to vote with their purses, wallets and credit cards on the future of the UK beef industry, says the National Beef Association.

It warns that if they do not immediately raise shop prices, and allow consumers to show whether they are willing to pay more for high provenance, high welfare, and high quality beef from British cattle, then in-store supplies will begin to dry up and shoppers will have to rely on beef imports instead.

"Rampant cereal prices and falling Single Farm Payments are pushing the UK beef industry into the Last Chance Saloon. If more new income is not generated through realistic retail prices for beef, and then reflected in a massive lift in the value of slaughter cattle, there will be a shut down in beef farming across the UK," saidNBA director Kim Haywood.

"Farmers are pragmatists. Many have stuck with beef, despite persistent losses since subsidies were decoupled in 2005, in the vain hope that slaughter prices would rise significantly. But spot prices of £175 a tonne for feed barley and £190 a tonne for feed wheat have undermined the last of finishers' resolve and sucked calf breeders also know that their own future is now in question."

She said that Tesco has responded to higher cereal costs by lifting its price for a bread loaf by 8p.  However it, and others, has still to react to the additional 21p-24p per deadweight kilo cost faced by suckled calf finishers as a result of the same hike in grain prices. And if a retail lifeline is not thrown out this autumn the NBA predicts the following developments as the cash starved beef sector initiates its own wind down.

"Finishers who grow their own grain will take a last look at the contrast between selling their grain on the spot market for anything between £175-£190 a tonne, and feeding cattle likely to be sold at just 185p-220p per dwkg, and decide that they cannot turn their back on a chance to more than double their income from grain," said Haywood.

"This will be followed by a rush to clear existing stocks of cattle before super-expensive grain needs to be fed in winter and suckled calf breeders will see their own losses increase as the market for store cattle plummets.

"Slow maturing store cattle that can be maintained without grain this winter will be held over to finish off grass next summer and in the meantime breeders will begin to run down their cow herds."

She added that once the long delayed decline in suckler cow numbers gathers momentum it can only be halted by a massive upward correction in the price of suckled calves - and that will only happen if efficient finishers are given the confidence to repair the fracture between themselves and breeders by being reassured that they will be able to cash high specification R4L cattle for at least 260p-270p per dwkg.

"It is crunch time for the beef sector. Everything that it was afraid of when direct subsidies disappeared in 2005 is now striking home.

"Long term survival can only be assured through a much needed upwards adjustment in market income and that can only be triggered if retailers forswear their discount pricing of a supremely sensitive product and allow consumers to make clear their support for the domestic beef industry."

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