May 17, 2004

MLC Turns Bullish On UK's Red Meat Industry

The Meat and Livestock Commission (MLC) has gone completely bullish over its forecast on prospects for the British beef sector, with sheep not too far behind and pigs showing real signs of recovery.

Underlying reasons for this optimism are growing world demand fuelled by economic growth, particularly among the wealthier sections of the developing world.

"The overwhelming message is that world trade is still comparatively alive and well," said Bob Bansback, MLC corporate strategy director.

Speaking at the British Meat Processors Association's first annual conference in London, he even went so far as to dismiss growing fears that the European beef market could be flooded by imports from South America.

"Domestic demand in Brazil is such that if the economy grew by 7 per cent per annum over the next five years, it might well become a net importer of beef rather than a net exporter, although the same could not be said of its exports of pork and poultry," he said.

Currency exchange rates would continue to remain the biggest single factor determining producer returns and price levels in Britain. This would remain the case until added-value and branded products rather than commodity driven factors influenced the supply chain.

At a European level, he forecast the EU-15 would become net meat importers for the first time in 30 years by 2006, and this could present real business opportunities for British exporters, regardless of EU expansion.

At the UK level, red meat consumption was continuing to rise. "Who would have believed the trends over the past four years which show a 5 per cent rise in red meat consumption at the same time as a 1 per cent reduction in poultry meat," he said.

Other positive messages included the current level of producer returns; the prospect of a resumption of "normal" beef exports in the next year; and signs of the home market regaining stability after a period of high import penetration.

But he accepted there were still major issues to tackle. There were concerns about domestic beef supplies with fewer dairy based calves; high feed prices and continuing import pressure in both beef and pig meat.

However, he remained optimistic these could be overcome through increased confidence and better supply chain relationships, bridging the gap of a potential 90,000 tonnes production shortfall even before the ban on over 30 month old cattle entering the food chain was lifted.

He also minimised the impact of this latter move by suggesting that increased exports and import replacement would soak up most of this production.

Turning to sheep, he forecast enhanced opportunities for market improvement through increased exports. For pigs, he said there were signs the decline in this sector had bottomed out. In addition, there were opportunities to improve efficiency in production and the supply chain as well as targeting the export market, notably China.