Auctioneer Bruce Walton

A fall in the price of finished cattle over the past fortnight has sparked further fears of undermining confidence in the UK beef industry.

The National Beef Association is warning that beef industry morale is under renewed pressure - particularly as the Prime Minister used the G8 Summit to launch an unsettling attack on the newly installed Single Farm Payment (SFP) and other rural support.

New NBA chairman Duff Burrell, said, "The rest of 2005 is going to be especially tricky for the beef farmer because he is faced with an unsettled market as a result of twin disturbances caused by adjustments to the removal of BSP payments and the imminent return of cow beef into the trading system."

"We are worried that many will react to the extremely disappointing price position by reviewing their commitment to beef cattle in 2006 and beyond."

"There is only one cure for this and that is acceptance by retailers, and then processors, that beef farmers cannot survive medium term at current prices and that if the depressed market continues many could, and should, give up breeding and feeding and discover other, more encouraging, ways of making a living."

Auctioneer Bruce Walton, of Hopes Auction Company, Wigton, said finished beef prices had dropped by between 10p and 15p a kg over the past fortnight which he blamed on a combination of factors, including supermarkets buying imported beef to mitigate what they had anticipated would be a period of strong trade.

“What concerns me is the longer term, knock-on effect if it continues - there will not be an industry left,” he said.

“The store cattle prices are cheaper but not to any great extent but it takes time to work through the system. But if the feeders aren't buying the cattle from the breeders in the hills then they won't keep their cows, particularly now with the new Single Farm Payment system,” he added.

According to the NBA there is a need for an overall, all-industry, strategy to help the beef sector overcome the difficulties of decoupling with as much of the supply system as possible intact.

"Unwelcome price disturbance has been caused by a hitherto unnoticed trend, both in the UK and the Republic of Ireland (ROI), to finish steers up to six months younger than they would have been if a second BSP payment was in train," said Mr Burrell.

"This has pushed more beef onto the market at a time when less was expected and retailers had already put in advance orders for substantial steak top ups from South America."

"On top of this some wholesalers are already anticipating the appearance of cow beef in late October and are not beginning to store forequarter beef as is usual at this time of year."

"We are certain that further price volatility, with many unexpected highs and lows, will be a damaging and morale sapping feature of the post-decoupling adjustment period."

"Our fear is that this income unpredictability will further undermine farmer confidence and that the message the Association has long put forward, which is that efficient farmers will not continue to produce beef unless they are paid enough to cover their costs, must be heeded otherwise there will be a catastrophic, but avoidable, fall in beef output."