21 November 2007

3 minute read

Europe

The Finance Committee's interest is primarily in the implications for the Assembly Government's budget but; the financial ramifications on the Welsh livestock industry have been considerably greater.

Commenting on the difficulties faced by farmers across the country, NFU Cymru President Dai Davies said, "No farms in Wales were directly affected by foot and mouth disease, but the application of movement restrictions and constraints imposed on trade have caused immense financial damage.

"The constraints on meat and meat product exports from Wales may have been removed this week, but, a ban on all live exports will likely continue until the end of this year. Leaving the market effectively closed for five months.

"The sheep sector was particularly hard hit by the FMD restrictions and it will take some months for markets in Wales, and the rest of Great Britain, to readjust because of the backlog of animals to be sold. This impact has been proportionately greater in Wales than in some other parts of Great Britain as the peak period for marketing lamb in Wales coincided with the movement ban and the closure of outlets. There will also be mid term effects going into next year with breeding stock having lost condition because they could not be moved to fresh grazing, which may affect the size of next year's lamb crop.

"The finished market in Wales for lamb is driven by exports, 35% of which are normally exported, and the closure of the export market during the peak marketing period in Wales has had disastrous economic consequences. Since the beginning of August, prices have declined by 33% which compares to a reduction of just 3% for the same period last year. This fall in market prices will have resulted in a loss of some £11million to the sheep sector.

"But, whilst the sheep sector has faired particularly badly as a consequence of movement and trade restriction , the beef and dairy sectors, though less vulnerable, have not been unscathed. The dairy sector has been affected by the loss of the live market for calves and because of the export market for barren cows, prices have been eroded.

"It is estimated that but for the likely 5 month export ban, 25,000 dairy/bull calves valued at approximately £50/head would have been exported – a loss to the dairy sector in Wales of around £1.25million. In addition to this loss, the reduced value of barren cows has cost the sector around £1.4million."

Mr Davies concluded, "It is premature, at this stage, to get an accurate feel for the full financial losses that are likely to be incurred by the industry and indeed it will be difficult to put a financial figure on all the adverse effects. It will be the farm income figures for 2008/9 that will reflect the extent of the damage caused to farm businesses in Wales, as our discussions with the banks suggest that overdraft facilities have been extended on the back of impending Single Farm Payments, due in December, but that this will likely cause cash-flow problems next year.

"What we can say however is that the quantified losses of some £34million and additional consequential costs such as extra feed arising from movement restrictions are likely to leave the industry facing a bill well in excess of £40m."

NFU Cymru continues to believe that the total cost of any recovery package should come from Treasury funds and continues to look to the Welsh Assembly Government to progress the issue of recovery aid with the Treasury.

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