- Location
- Bury St Edmunds, Suffolk
Beef sector faces autumn supply crisis as desperate spring-calving dairy farmers rid themselves of unwanted cows.
Beef production in the United Kingdom has been ambushed by adverse political developments and the threat of radical de-stabilisation had become critical.
The market value of finished cattle has already slumped below the level at which efficient farmers expect to cover production costs and generate a positive margin.
And later this year another income crash is anticipated after the market is choked by an over-supply of abandoned dairy cows which have been released for slaughter by de-moralised dairy farmers who no longer have the wherewithal to stay in business.
There can be no doubt that today’s dominant beef industry pressures are the macro-economic result of political decisions developed in Brussels and supported by Westminster.
The first, the imposition of US backed trade embargos on Russia in July-September 2014 after the annexation of Crimea and sparring over the spread of European influence in Ukraine, crushed hopes of an EU-wide lift in beef cattle prices triggered by rising world demand and relatively relaxed trading conditions at global level.
At that time the official R4L steer average for Great Britain was in the region of 355p-360p a kilo - which borders the 360p-365p which efficient farmers judge to be sufficient to make them feel positive.
There were hopes it would lift to 380p, which would have been comfortable, but the most recent confirmed R4L figure is 333.4p and falling.
One reason is that the EU average is a bleak 300p (euro=79p) because exports out of former Eastern Europe into Russia have been blocked and the backup of supplies on the internal market is stifling.
Another is that this price discrepancy has made it difficult, if not impossible, to export UK beef onto the wider EU market so UK production can only be distributed domestically at the same time as much cheaper imports from the Republic of Ireland (average R4L price 299p) and Poland (243p) drag heavily on UK values too.
UK cattle values continue to slip under this pressure but the descent is expected to plunge to crisis levels from late summer onwards when the beef market will be swamped by cows abandoned by desperate dairy farmers who can no longer stay in business.
Once again the trigger is political – this time the EU decision to discard quota restraints on milk production at the end of March last year.
One result has been a boom in output, encouraged by milk processors and an over-optimistic view of the world market, which has provoked an ever-accelerating plunge in raw milk prices that is not expected to bottom out before the end of the year.
Another is that amidst this chaos hundreds of dairy farmers milking tens of thousands of cows have either lost, or expect to lose, supply contract guarantees and are, or will be, selling milk onto a vastly under-priced second tier spot market.
Many of these (number still unknown but expected to be significant) have decided to milk their cows off cheap grass this summer but give up production as autumn, with its increased feeding and management costs, approaches – unless there are signs of a milk price lift.
The current view is that the dairy market will not turn until next year and so beef farmers are expecting an avalanche of super-cheap dairy cows to be offered for slaughter and strangle their market from July onwards.
Some will do what they can to bring forward cattle while trading, although already depressed, will still be orderly.
But none expect to escape the pressure forced on them by anarchic selling conditions created by an over-supply of second quality, dairy industry, rejects that will swamp distribution channels and drag down the value of specialist, prime quality, beef as well.
Ultimately the British R4L average (which includes Angus and other retail scheme cattle) could be 300p which would trigger a crisis of morale in the already despondent beef sector because standard R4L commercial cattle presented in England, Wales and Scotland too could be selling for even less.
(The original of this article was handed over to the Prime Minister and MPs by the organisers of last week’s (March 23rd) Farmers’ March in London.
It was written by Robert Forster, publisher of Beef Industry News which is respected nationwide for its informed commentary on dominant beef industry developments in the UK. More information can be found at www.rforster.com)
Beef production in the United Kingdom has been ambushed by adverse political developments and the threat of radical de-stabilisation had become critical.
The market value of finished cattle has already slumped below the level at which efficient farmers expect to cover production costs and generate a positive margin.
And later this year another income crash is anticipated after the market is choked by an over-supply of abandoned dairy cows which have been released for slaughter by de-moralised dairy farmers who no longer have the wherewithal to stay in business.
There can be no doubt that today’s dominant beef industry pressures are the macro-economic result of political decisions developed in Brussels and supported by Westminster.
The first, the imposition of US backed trade embargos on Russia in July-September 2014 after the annexation of Crimea and sparring over the spread of European influence in Ukraine, crushed hopes of an EU-wide lift in beef cattle prices triggered by rising world demand and relatively relaxed trading conditions at global level.
At that time the official R4L steer average for Great Britain was in the region of 355p-360p a kilo - which borders the 360p-365p which efficient farmers judge to be sufficient to make them feel positive.
There were hopes it would lift to 380p, which would have been comfortable, but the most recent confirmed R4L figure is 333.4p and falling.
One reason is that the EU average is a bleak 300p (euro=79p) because exports out of former Eastern Europe into Russia have been blocked and the backup of supplies on the internal market is stifling.
Another is that this price discrepancy has made it difficult, if not impossible, to export UK beef onto the wider EU market so UK production can only be distributed domestically at the same time as much cheaper imports from the Republic of Ireland (average R4L price 299p) and Poland (243p) drag heavily on UK values too.
UK cattle values continue to slip under this pressure but the descent is expected to plunge to crisis levels from late summer onwards when the beef market will be swamped by cows abandoned by desperate dairy farmers who can no longer stay in business.
Once again the trigger is political – this time the EU decision to discard quota restraints on milk production at the end of March last year.
One result has been a boom in output, encouraged by milk processors and an over-optimistic view of the world market, which has provoked an ever-accelerating plunge in raw milk prices that is not expected to bottom out before the end of the year.
Another is that amidst this chaos hundreds of dairy farmers milking tens of thousands of cows have either lost, or expect to lose, supply contract guarantees and are, or will be, selling milk onto a vastly under-priced second tier spot market.
Many of these (number still unknown but expected to be significant) have decided to milk their cows off cheap grass this summer but give up production as autumn, with its increased feeding and management costs, approaches – unless there are signs of a milk price lift.
The current view is that the dairy market will not turn until next year and so beef farmers are expecting an avalanche of super-cheap dairy cows to be offered for slaughter and strangle their market from July onwards.
Some will do what they can to bring forward cattle while trading, although already depressed, will still be orderly.
But none expect to escape the pressure forced on them by anarchic selling conditions created by an over-supply of second quality, dairy industry, rejects that will swamp distribution channels and drag down the value of specialist, prime quality, beef as well.
Ultimately the British R4L average (which includes Angus and other retail scheme cattle) could be 300p which would trigger a crisis of morale in the already despondent beef sector because standard R4L commercial cattle presented in England, Wales and Scotland too could be selling for even less.
(The original of this article was handed over to the Prime Minister and MPs by the organisers of last week’s (March 23rd) Farmers’ March in London.
It was written by Robert Forster, publisher of Beef Industry News which is respected nationwide for its informed commentary on dominant beef industry developments in the UK. More information can be found at www.rforster.com)
