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Robert Forster worked as a livestock and business journalist for a range of publications including Agra Europe, Farmers Guardian and Scottish Farmer as well as BBC Radio 4 “Farming Today”. He was founding chief executive of the National Beef Association before stepping back in 2008 to write its weekly Newsletter. He now produces his own Beef Industry Newsletter.


An attempt to keep the issues surrounding Brexit simple.


The UK is still a fully paid up member of the EU club and until formal withdrawal, current consensus no sooner than autumn 2019 and perhaps later, UK farmers and meat processors will continue to be obliged to meet EU rules and the former will continue to receive EU support payments.


The likelihood that the UK will (eventually) leave the EU is greater than the possibility that, assuming a number of constitutional problems can be overcome, it will remain.


Current indications are that the UK’s farmers will enjoy support CAP payments at current levels for something like three years, perhaps longer, before they face exposure to the post-EU market. The likelihood this could be a honeymoon period is underlined by the post-referendum swing in the slaughter cattle market where the base price for both commercial and retail scheme cattle continues to advance and cow prices are, despite unrelentingly high volumes, reassuringly constant. If, as expected, the value of the euro against sterling lifts to 90p before the end of the year the rise in UK slaughter cattle values relative to those in the Republic of Ireland (RoI) will be further underpinned. After the UK’s exit from the EU domestic beef cattle values will be exposed to competition from South America and imports from other low cost countries if the Westminster government has decided to pursue a low cost food policy and secure new trade agreements with non-EU countries. Farm, and other, lobbyists may be able to prevent this but beef farmers are being advised to immediately set out to reduce the cost of producing a kilo (live or dead) of beef so they are better able to survive price slumps and prosper during periods when domestic prices are strong.


If, after the UK has left the EU, the government approves the delivery of beef from South America, Australia and the United States, the South


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American beef will be taken from cattle currently valued at 210p-220p a dwkg while beef cattle sold deadweight in Australia and the US currently average around 290p-300p.


Many hope that when/if the UK is able to set its own rules it will decide to approve GM crops, secure the continued use of glyphosate, abandon individual sheep EID, replace the EUROP grid with a quality assessment mechanism that takes account of eating quality, and take a positive position on the cloning of high genetic value, pedigree, breeding animals. Those that are bullish about this hope that trade with the EU will be able to continue on the back of an agreement on common farm/industry standards (not current EU regulation) including animal welfare and food safety as well as the issues listed in the previous paragraph.


Others are less optimistic and expect current EU regulation to be carried forward because without it the UK would not have access to important EU markets. The post-referendum decline in the value of sterling against the euro and US dollar is expected to raise food price inflation within the UK by three to four per cent against every ten per cent fall. Sterling is currently down by around 20 per cent against the euro (70p on June 23rd and 86p w/e June 9th) so can retail beef prices be expected to lift by six to eight per cent on the back of deliveries, principally from the RoI and Poland, being 20 per cent more expensive - and will this lift be reflected on the value of prime cattle offered on the UK market? The indications so far are that the answer is yes on both counts.


Robert produces Beef Industry News – the only independent information source for the UK’s beef sector. It is published on Friday evenings and valued for the quality of its coverage of the prime cattle market and other important industry issues. Find out more by logging on to www.rforster.com


AUGUST 2016


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