Why Processors Can't Pass the Buck to Farmers

UK - If abattoir owners demand that beef farmers pay for an avalanche of additional processing costs, they will force more of their own suppliers to give up producing finished cattle and risk undermining their own, throughput dependent, businesses.

14 October 2008

3 minute read

Europe

These are the thoughts of the UK National Beef Association. They say that instead of this they must warn their retail customers they face a series of important new, government imposed, public health related, charges and ask them for help in covering the added cost.

It is important that future supplies of home produced beef are not endangered by more farmers throwing in the towel because the crucial gap between cost of production and market income will still not close.

This is the view of the National Beef Association which is alarmed at the likely, cumulative, impact of a number of new charges, which, if approved, could add £20 to £25 a head to processing costs of older cattle, with the off takes appearing exclusively on farmer’s payment sheets.

According to the NBA the new deductions under discussion, and which may be adopted in January next year, include a £15 to £20 a head BSE brainstem test for cattle that are over 48 months old, and a £2 to £3 a head charge for the disposal of special risk material (SRM) from animals aged over thirty months.

On top of this, a 20 per cent increase in MHS charges to around £3.90 per head for all slaughter cattle could be adopted by March next year and a 50 per cent lift in the cost of micro-biology tests carried out by the Veterinary Medicines Directorate for anti-bodies and unwanted residues is in the pipeline too. The latter currently cost around 50p per head and the bill to industry each year is at least £1.5 million.

“Government is determined to gather EU and domestic approval for it to dump these costs on the beef industry. The NBA is worried that if further costs are forced onto farmers there will be an even greater exodus from farming beef,” warned Association director, Kim Haywood.

“Formal discussion on the transfer of brainstem testing costs takes place in Brussels on Wednesday (October 15th) and the Association is unhappy that the UK Government is ready to wriggle out of its public health responsibilities in the beef sector and try to hoist hefty consumer protection costs onto the production chain.”

“We are also getting a very strong message that if, or when, these additional charges are approved, processors will immediately take the easy route of passing them straight back to farmers.”

“Our warning to them is that while this may have worked in the past it would be a dangerous move now because what remains of Single Payment is de-coupled from production and more farmers can, and will, move out of beef production if their losses increase.”

“Although market income has risen strongly over the last ten months, production costs have soared too, and beef farmers are still not being paid enough for their cattle for them to be confident about being able to stay in business.”

“If processors cannot convince their retail customers that it would be wise, for the sake of future supply security, for them to help out when additional processing costs come through, particularly when these additional costs are related to the protection of public health, then the inevitable response from producers will be a huge drop in morale and more, much needed beef cattle suppliers, dropping out of the sector altogether,” Ms Haywood added.