THE prospects for the beef and sheep sector appear set to remain positive for the next few months, according to the leaders of UK and Irish farming unions.
The consensus after a meeting in Belfast was that, with beef and lamb supplies in the UK both at historically low levels, producers are in a strong position to demand appropriate prices.
Speaking after the meeting, Rob Livesey, chairman of NFU Sco
tland's livestock committee, said: "Having sat down with fellow producers from England, Wales, Northern Ireland and Eire, the general view was that producers should take much-needed confidence from the current beef and lamb market situation and the positive outlook for the rest of the year. A prolonged period of confidence and profitability is needed if we are to halt the steep fall in numbers of sheep and cattle being kept.
"Scotland is not alone in facing this issue, and the meeting highlighted that livestock numbers are down across the UK and Ireland. A similar scenario is being seen in the rest of Europe. This is at a time when consumer demand for beef and lamb is remarkably steady."
A recent survey by the analysts TNS revealed that, in the 12 months to the middle of May, UK household expenditure on fresh meat rose by 9 per cent to a record high of £6.7 billion. But there are indications that consumers are becoming increasingly careful with their money and moving towards cheaper cuts.
Sales of top-quality roasting joints fell by 11.3 per cent, with purchases of second-quality roasts declining by 25 per cent. This has presented the processing sector with a problem. In the past it was frequently difficult to sell forequarters of beef while hindquarters were easy to move.
The trend away from the more expensive cuts is exacerbated by a reported downturn in eating out in restaurants and hotels.
Purchases of mince and second-quality stewing steak increased last year by about 20 per cent, with sales increasing over the past 12 months by 9 per cent. Purchases of sausages rose by 14 per cent to a total value of £560 million. The survey suggested that there is reduced waste with sausages.
Farmers have recently received about 30 per cent more for cattle at point of slaughter than at the beginning of 2008. However, with the average retail price at £6 a kilo, consumers have been paying only an additional 13.7 per cent, with producers clearly getting an enhanced share of the retail value. However, the total volume of beef purchased by UK households in the past year, 296,000 tonnes, was down 4 per cent.
With production still declining and unemployment rising, consumer price resistance may start to show. Farmers would be unwise to expect ex-farm values to rise much further. There are indications of this trend emerging in France and Germany, where the economic recession is more severe than in the UK.
In France, sales of pork, usually cheaper than beef, increased by a highly significant 7 per cent in the year to 17 April.
UK purchases of poultry have risen by 8.7 per cent, with the total spend reaching £2.2 billion over the full year The average retail price of poultry, at £4 per kilo, is appreciably cheaper than either beef and lamb and has risen by only 8.7 per cent.
The UK is hugely dependent on imports of beef from the Republic of Ireland, but last week the total kill of cattle, 23,000, was the lowest for more than four years. Irish exporters have struggled in recent months to make a margin on beef shipped to the UK, but trade sources say that conditions have improved slightly with sterling rising against the euro.
Currency volatility will be an important factor in the coming months, and while a euro was worth on average 92p in the first quarter of 2009, RBS forecasts that the rate in the final quarter will be 82p, and only 76p towards the end of next year. If this forecast is correct exports of UK beef and lamb to the rest of the EU will be decidedly less competitive.
However, Livesey, who farms near Melrose in the Borders, remains upbeat. He said: "Following the meeting with colleagues, we want to put out a clear message to producers that they should take encouragement from current market conditions, continue to sell their livestock strongly and be prepared to negotiate for higher prices."
