May 23, 2007

Biofuels boom seen further blow to UK beef farmers

Rising demand for biofuels has sent the price of grains soaring, increasing costs for livestock farmers as they struggle to recover from devastating disease outbreaks and reduced government subsidies.

With the price of wheat, which is used both to produce bioethanol and to feed cattle, up 15 percent since April, UK beef farmers are reeling from its high prices which prompted some to sell off herds.

A cattle farmer such as Paul Hinwood has already diversified into crops such as wheat and corn and has limited his livestock animals. He said though the increase of biofuels has helped push the value of wheat, it also has started to become uneconomically viable to feed cattle and sheep.

Hinwood said the increase in grain would definitely prompt a downward trend in livestock production in UK.

In recent years, the industry has been hit by a combination of reduced subsidies, cheap imports and disease outbreaks.

The emergence of bovine spongiform encephalopathy, or mad cow disease in the late 80s, and an outbreak of foot and mouth disease in 2001 led to millions of cattle and sheep being destroyed.

That resulted in reduced exports, while lower-priced beef imports from Brazil, New Zealand and Argentina also took their toll.

In 2006, the UK farm ministry reported an 86 percent decline in the value of beef exports between 1996 and 2005 and a 54 percent increase in the value of imports.

Subsidies for the industry have also been changing. Britain recently moved to an EU farm subsidy system that pays farmers on a per hectare basis rather than on the number of animals they have, a move some farmers say has discouraged livestock farming.

Arthur Ratcliff, sold his 400 acres (162 hectares) in February 2006 after farming livestock for 30 years, stating a low profit and a hazy future for cattle farming.