Prices need to rise (From Wiltshire Times)

Prices need to rise

NFU president Tim Bennett and Livestock Board chairman Richard Haddock look at the current state of the beef and lamb market.

The NFU has expressed its frustration at the lack of positive messages coming from the supply chain to beef and lamb producers in England and Wales.

Beef and lamb production in England and Wales has enormous potential. We have the right climate to produce grass, and we have the right skills, assurance standards and infrastructure to make sure that the whole of the supply chain can be efficient and profitable.

However, to realise this potential beef and lamb producers need clear market signals to give them confidence in the future viability of beef and lamb production. The current producer prices for both beef and lamb are not at realistic levels for beef and lamb finishers.

As we are now in the critical autumn period, this is sending the wrong signals to purchasers of store and breeding animals.

The net result is a total lack of confidence for many producers.

In particular the NFU is alarmed and mystified to see the widening of the gap between farm gate prices and the retail price of beef and lamb.

At a time when the industry needs to maximise its share of the retail price, the exact opposite is happening and this makes no sense at all.

The current average retail price is 424.9 pence per kg and the average farm gate price is 178.8p/kg.

Therefore there is a gap of nearly 250p/kg, and we do not believe that this can be justified.

As this position is not sustainable the NFU is in the process of holding a series of urgent talks with retailers, processors and caterers.

The message to them is clear the price must go up.

The NFU recently had confirmation that the OTM rule will be changed and animals born after August 1996 will be able to enter the food chain with effect from November 7.

This again is a positive signal.

The NFU has spoken to major caterers and food service providers and there is recognition of the additional British beef that will become available.

With the shortage of manufacturing beef across the EU it expects producers' prices for these older animals to be in line with prices in other EU member states.

The NFU also recently held talks with EU officials on the timescale for lifting the EU embargo on UK beef exports.

Once the report of the EU recent inspection of the UK controls has been published the NFU expects to see progress on this issue with the aim of removing restrictions on UK beef exports early in 2006.

The NFU has big concerns about the initial period when the OTM rule is amended as Britain still excluded from the EU market because the beef embargo is still in place.

Therefore the NFU is discussing with DEFRA and the Commission the need for the current OTM scheme to be maintained alongside the new Older Cattle Disposal scheme until at least UK exports resume with the rest of the EU.

The NFU's national livestock board held an additional meeting in September to review it's recent work on the beef and lamb market and to agree the next steps of its ongoing work aimed at securing positive market signals from the supply chain.

In addition, NFU livestock board members will travel to Dublin for meetings with the Irish Farmers Association to discuss the common concerns on the development of the beef market.

The NFU has no doubt whatsoever that there is a positive outlook for beef and lamb production in England and Wales. However, we need a more realistic price, we need positive signals from the marketplace that provide some confidence for producers and we all need to start looking at this industry in a much more positive light.