NFU Cymru has expressed its anger and frustration at the negative messages coming from the supply chain to beef and lamb producers in Wales and England.
Peredur Hughes, President of NFU Cymru said, "Beef and lamb production in Wales and England has enormous potential. We have the right climate to produce grass, and we have the right skills, assurance standards and infrastructure to make sure that the whole of the supply chain can be efficient and profitable. However, to realise this potential beef and lamb producers need clear market signals to give them confidence in the future viability of livestock production."
Current producer prices for both beef and lamb are not at realistic levels for beef and lamb finishers. As we enter the critical autumn period this is sending the wrong signals to purchasers of store and breeding animals. The net result is a total lack of confidence for many producers.
In particular we are alarmed and totally mystified at the gap between farm gate prices and the retail price of beef and lamb. At a time when the industry needs to maximise its share of the retail price the exact opposite is happening and this makes no sense at all.
The current average retail price is 424.9 pence per kg and the average farm gate price at 178.8 p/kg. Therefore there is a gap of nearly 250 p/kg, and we do not believe that this can be justified. As this position is not sustainable we are in the process of holding a series of urgent talks with retailers, processors and caterers. Our message to them is clear - the price must go up.
Peredur Hughes continued, "Something is seriously amiss when we see record profits in the supermarket / retail sector and such poor prices for beef producers!"
NFU Cymru recently had confirmation that the OTM rule will be changed and animals born after August 1996 will be able to enter the food chain with effect from 7 November. This again is a positive signal. We have spoken to major caterers and food service providers and there is recognition of the additional British beef that will become available. With the shortage of manufacturing beef across the EU we would expect producers' prices for these older animals to be in line with prices in other EU member states.
We also recently held talks with EU officials on the timescale for lifting the EU embargo on UK beef exports. Once the report of the EU recent inspection of the UK controls has been published we expect to see progress on this issue with the aim of removing restrictions on UK beef exports early in 2006.
We have big concerns about the initial period when the OTM rule is amended as we are still excluded from the EU market because the beef embargo is still in place. Therefore we are discussing with the Welsh Assembly, DEFRA and the Commission the need for the current OTM scheme to be maintained alongside the new Older Cattle Disposal scheme until at least UK exports resume with the rest of the EU.
Mr Hughes concluded, "We have no doubt whatsoever that there is a positive outlook for beef and lamb production in England and Wales. However, we need a more realistic price, we need positive signals from the market place that provide some confidence for producers and we all need to start looking at this industry in a much more positive light."