January 8, 2007

 

Scotch beef outlook good for producers

 

 

The year 2006 saw the return of British beef into the European market with meat from animals over 30 months of age, born on or after Aug 1, 1996, re-entering the food chain.

 

The ban was imposed in March 1996 after recognition of a link between BSE and a new variant of the fatal human condition Creutzfeldt-Jakob disease (vCJD).

 

Following a dip at the start of the year, 2006 producer prices then rose by 12 percent between February and June surpassing year earlier levels in March, but with the main increases coming prior to the lifting of restrictions in May.

 

The average retail price of beef increased 4 percent between May and the end of October for the first time in more than four years, according to the Government's Office of National Statistics.

 

Scottish abattoirs handled 2.5 percent more cattle over the H1 of 2006 compared to a year earlier. However, supplies tightened in the H2 of the year and cumulatively by the end of November, Scottish abattoirs had handled 1 percent fewer prime cattle than over the first 11 months of 2005.

 

Carcase weights also reduced from year earlier levels and were significantly lower during the H2 of the year.

 

With the lifting of an embargo on Scottish beef, domestic market has also improved registering an increase of 2.7 percent in consumption over the Q1 of 2006.

 

Imports however declined in 2006 owing to restrictions on importing beef from Brazil and Argentina. Irish beef though, has seen a rise.

 

Prime beef supplies across the UK and Europe would remain tight in 2007. Per British Cattle Movement Service data, there has been a fall in calf registrations during 2005 of 5 percent across Britain and 2.5 percent in Scotland.

 

This, on the surface could mean better producer prices, particularly in the short term as restrictions still apply to imports from outside the EU.

 

However, many EU member states have been worried that a general lack of economic vitality and consumer confidence in many countries might lead to consumer resistance if prices rise too much. This might act as a drag on producer prices.

 

Nevertheless, Scottish producers are likely to see some benefit from a slow growth in export demand for high-quality beef, increasing use of high-quality Scotch beef in supermarket premium range products, where sales are showing steady growth, and reduced numbers of prime stock reaching market.