August 11, 2011

 

UK's credit shortage threatens beef herd

 

 

The UK beef cattle sector is facing finance problems that could lead to a severe contraction in the size of the country's cattle herd.

 

The warning comes from the National Beef Association (NBA), which is calling on banks to either increase overdraft limits or offer other credit to allow suckled calf breeders to replace culled females and cattle feeders to buy a full yard of autumn feeding cattle.

 

NBA director Kim Haywood said, "Banks appear either not to understand the urgent need for beef farmers to secure credit that reflects recent leaps in the value of store and breeding stock.

 

"Or their post-credit crunch priority continues to be focused on the restoration of their balance sheet reserves instead of constructive lending to valuable, relatively small, private businesses that are the only secure source of supply for an important section of the UK's food processing and retailing economy." She spoke out as the cost of keeping cattle continues to increase on the back of high food, fuel, fertiliser and bedding costs.

 

"Current turnover on a cattle farm is 20-30% higher than it was during the last financial year but regular borrowing limits have not been raised to match it," said Ms Hay-wood. "As a result breeders are cashing their cull cows at record prices to maintain cash flow instead of using credit to re-stock their herds.

 

"In very simple terms meat traders can afford to buy commercial quality beef cows at a record GBP800-GBP900 (US$1,295.84-$1,457.82) a head but the breeders cannot afford to invest GBP1,800 (US$2,915.64) in a useful heifer and calf unit so their 2012 output levels are maintained."

 

She said the feeding side of the sector was facing similar issues. Despite record high prices, feeders cannot afford to replace their entire stock and bring the new intake up to slaughter weight.

 

Haywood said, "Raised credit limits are urgently required if the UK beef industry is to maintain its much needed output over 2012-2013. Many feeders are holding back from the store market and breeders are keeping fewer cows because they have not the cash, or credit, available to keep their numbers up."

 

Cull cow disposals are up by a quarter compared to last year but the beef heifer slaughter statistics are also up by 7%, so the herd is not having a chance to recover its size, the NBA warned.

 

"This means that the UK's specialist beef herd is shrinking. This would not be happening if the increased turnover of both breeding and feeding business was accompanied by proportionately higher credit lines," said Haywood.