Monday, August 06, 2007

Country Conversations

Now we are living in the country (as against living in a small country market town) we seem to be that much closer to the big issues of the day - the countryside and all it stands for (or doesn't, as the case may be). So expect a few comments and observations in the months ahead.

We are living in the country courtesy of the last Foot and Mouth epidemic. Our barn conversion came about because the farm no longer has a dairy herd, having converted to stock rearing (or fattening, hence the term "fatstock"). Heifers desitined for the abbatoir don't need a barn.

Now there appears to be yet another Foot and Mouth outbreak, this time the virus possibly emanating from a government research laboratory. With two herds slaughtered and movement of cattle and sheep restricted, this is going to have serious financial repercussions across all of England.

For example, the heifers grazing in the fields around us will soon need to go to market. Once they pass 30 months of age the value of the meat goes down. So if they cannot be moved to market they will drop in value yet continue to use up resources on the farm. That's a double whammy for the farmers.

Raising stock is unprofitable. Which begs the question why farmers even bother. There is a huge deficit between the market price of cattle and the costs of raising cattle. According to a survey conducted by the NFU there is a huge profitability gap for both cattle and sheep. The downward pressures on the farmer are several, including: 1. Retailers (such as the big supermarkets), determined to drive prices down yet expecting better quality, delivery, etc., 2. Abattoirs, also determined to be opportunistic in their buying practices rather than work with the farmers, 3. Government and EU, for their often unnecessary codes of practice including TSE-related controls on sheep carcase splitting.

As a typical example, a lowland sheep will sell for approximately £47 a head at market. Yet the cost of raising that sheep ready for market will be in the order of £113 a head. This means there is a loss of £66 per head of sheep. I don't know how or where the difference is made up, but no end of cost saving measures could possibly eliminate that profit gap once farm subsidies are phased out and eliminated. Something else has to give.

Higher meat prices, anyone?