Disease aftermath will cost billions

Disease aftermath will cost billions

May 12, 2001 The Herald (Glasgow) by Dan Buglass

THE worst of the foot-and-mouth crisis may appear to be over but it will be many months before the total cost of what is viewed as the greatest disaster ever to strike UK farming is known.

The bill will be billions of pounds rather than millions. The initial estimate of a weekly cost to the farming industry of £8m per week is very wide of the mark.

The truth is that it will take the industry a very long time, perhaps as long as five years, to regroup. In total it seems likely that around 4% of the national sheep flock of 19.5 million ewes has been lost, but that estimate takes little account of the loss of production both this year or the downstream consequences in subsequent seasons.

On the dairy front, with almost 800 herds having been taken out, there appears to be little risk of a super-levy being imposed on the industry on account of over production in the foreseeable future.

The upshot is that milk quota, despite the assertions of professional brokers, will be worth very little for some time.

Meanwhile, it is obvious that there will be a sharp increase in the value of dairy cattle, even before re-stocking commences. This will be seen by some, whose herds escaped FMD, as an opportunity to retire from the industry with dignity and a decent cheque.

Export markets will remain closed for many months, with major implications for all sectors of the livestock industry.

In terms of losses it is the pig and sheep sectors which will suffer most. Last year the UK exported 97,000 head of live pigs, many of them disease-free status breeding stock with a value of £9.5m. Most of that trade was with the EU and should eventually be recovered.

In terms of pigmeat trade, the losses are more of a technical nature given the shrinkage within the UK breeding herd and the continued strength of sterling against the euro. Nonetheless, in 2000, the UK exported just over 200,000 tonnes of pork and 9000 tonnes of bacon worth £160m.

However, in practical terms the greatest problem for the pig sector is the disposal of cast sows. Prior to FMD over 90% were exported to Germany for manufacturing into sausage type products. This important market was worth at least £20m.

Cull sows can hardly be given away, with the result that slaughterings for entry into the food chain are down by 55% on the same period last year.

The welfare disposal scheme has so far taken out nearly 130,000 pigs, many of which were sows. However, the recent reduction in the compensation rate to just £30 per head does no more than recognise market circumstances.

The sheep market for the rest of this year is almost certainly going to be a two-tier operation. Breeding sheep of virtually any description will be in demand. In a broad sweep of Dumfries and Galloway, where previously there was a high concentration of productive flocks, there are no sheep to be seen. The same holds true for most of Cumbria.

These areas were traditionally reservoirs of high-quality replacement breeding stock for much of the UK. Mule ewes, lambs, and gimmers will be much reduced in supply this year.

The normal entry of 14,000 mule ewe lambs at the principal sale at Castle Douglas could well be reduced by almost 50%. There will also be few, if any, Scotch half breeds at Lockerbie.

Undoubtedly, the tragedy of FMD will result in some winners, and they are likely to be in the Provisionally Free Area north of the Forth and Clyde. Regular buyers seeking replacements will be joined by those who have seen flocks wiped out and, with compensation levels having been generous, it can be expected that trade for breeding sheep will be firm.

That scenario has to be set against the fact that there will be no exports of prime lamb for most of the year.

Last year the UK exported 764,000 live sheep worth £32m and 94,000 tonnes of sheepmeat in carcass form with a value of £180m. Scotland's share of that dead trade was worth £60m.

Inevitably, producers are in for a very tough summer and autumn, even if New Zealand fulfils its pledge to redirect most of its exports to mainland Europe.

A depressed trade for prime and store lambs may just take some of the edge off the value of breeding sheep. But, for those willing to take a gamble, there is the prospect of a re-opening of export markets in early 2002 and much higher prices.

The cattle trade is equally volatile. Prime values in the UK as a whole are marginally ahead of the same date last year, and the Scottish trade is running over 10p per kilo above that in

England and Wales.

Numbers of cattle are short and will remain so. But no one should forget that the EU is on its way to building up a stockpile of near on 500,000 tonnes of beef before the end of this year. That will ultimately have to be placed back on the market.

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