August 28, 2007


UK livestock's survival "threatened" over FMD, high feed prices



The UK livestock industry is near a "breaking point" as feed prices double following this summer's rainy weather and added costs from measures taken to control a recent outbreak of foot-and-mouth disease, business advisory firm Deloitte & Touche LLP said in a report Tuesday (August 28).


This combination "is threatening the survival of the UK livestock industry," Richard Crane, food and agriculture partner at Deloitte, said in the report. "British meat could become a rarity on supermarket shelves."


Higher meat prices will be "inevitable" in order to secure and safeguard the future of the UK meat industry, Crane added.


"It's not a question of if retail prices will go up, but will they go up enough," Crane said in an interview.


According to Deloitte, many UK livestock producers have seen feed prices - the largest cost in producing livestock - rise almost 100 percent.


Wheat, the largest UK crop, was stressed this season due to heat in April, which was followed by overly wet conditions at harvest. This was also a problem for other key producers such as France and Germany, at a time when overall world wheat stocks are at a historical low.


According to Crane, pig producers currently working with profit margins of GBP5-GBP10 a head are now looking at added costs of GBP20-GBP30/tonne. "They can't make money at these levels," he said in an interview.


And the recent confirmation of foot-and-mouth disease in southern England "could leave permanent scars" on the livestock sector, according to Deloitte.


The disease struck two cattle farms in southern England in early August, and movement and export bans were quickly implemented to stop the spread of the disease. Even though no further cases were discovered and most measures are now being lifted, Crane called it "a major blow" for the UK meat industry.


"The meat business came close to a complete standstill," said Crane in the report.


He said meat processors can now resume production, and retailers are able to supply British-produced-meat again after diminishing supplies.


Crane added there could also be repercussions to the GBP439 million-a-year UK meat export industry. And a drop in UK meat output and exports could give up market share to foreign competitors, he added.


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