BEEF

Fears that scheme will operate as a disincentive to breeding herd growth Sinclair sounds alert over suckler premium scheme An obscure technicality in the EU cattle subsidy system is turning into a serious threat to the British beef supply chain, regarded by analysts including MLC economist Duncan Sinclair along with producer lobbyists as almost certain to create shortages more severe than retailers expect even after the FMD disruption. "Particular care will be vital to prevent short-term responses to the subsidy signals causing long-term damage to the industry, leaving the UK market even more exposed to beef imports," claims Sinclair in his latest warning of how the Suckler Cow Premium scheme will squeeze production capacity. The SCP is part of an array of headage payments available to livestock producers. Processors, retailers and consumer groups in the UK have traditionally preferred this type of subsidy to the notorious intervention system, as the direct handouts provide money to farmers without, supposedly, forcing meat prices to artificially high levels. However, Brussels has changed the system. Farmers are now permitted to claim the SCP on some animals that will be finished as slaughter stock rather than kept as suckler cows. In other words, heifer supply to the beef market is now subsidised directly by headage payments similar to those previously available only on steers and young bulls. On the face of it this change is favourable to both producer and buyer, but Sinclair and other critics including some farmers' organisations point out it will operate as a disincentive to breeding herd growth at a time when breeding stock numbers in the UK are severely depleted. Sinclair estimates the current claim rate on heifers is at least 10% of total SCP entitlement, and he calculates this is effectively shrinking the breeding herd enough to deprive the beef industry of about 70,000 suckler calves a year in addition to the underlying capacity contraction. He describes this as a loss of "exactly the high quality beef required both to satisfy UK consumer demand and to spearhead a realistic return to exporting". However, major retailing strategists might point out the Brussels move is ultimately in their interest, as the subsidy switch is in part an attempt to reduce the structural surplus of beef in the EU, allowing more generous access terms to third country suppliers. {{MEAT }}