Milk price rise highlights dairy sector's role in meat industry Meat buyers dependent on home produced beef supplies may have a slightly more secure trading outlook following the latest round of milk price increases, led by Asda and Safeway. Threats of accelerating contraction in the dairy sector have been a source of increasing concern to meat market analysts. This is because milk producers play a much bigger part in providing raw material for beef processors than is generally recognised. Although one effect of the BSE crisis has been to take culled dairy cows out of the manufacturing meat supply chain, the market is also being constricted on the other side because changes in the EU subsidy system are imposing new limits on the available numbers of specialist beef cattle. As a recent market survey by the MLC noted, "milk price reductions, lower calf prices and quota pressures are all continuing to affect industry returns" and there has been "an underlying downward trend in cow numbers". MLC beef industry analyst Duncan Sinclair has repeatedly warned of a possible structural shortage in the UK specialist beef sector, implying a need to preserve the beef supply base on dairy farms. The National Beef Association shares his view, predicting beef processors and retailers will become increasingly dependent on supplies originating from dairy farms unless the restrictions in the new EU support system are eased. {{MEAT }}

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