However, it pointed out that despite healthy price rises for beef and a better medium-term outlook, the industry still faced challenges including industry regulation, the economics of beef production, welfare standards and the stewardship of the natural environment used by beef farmers.
Population growth
United Nations figures show that despite predicted difficulties in farming, the next decade will see the world population grow by 761m people. And with a rise in mouths to feed, the global demand for beef will increase by 14%, with demand from developing countries growing by an extra 18% in the next 10 years. The heightened demand has seen exports of beef from the UK double in the last five years.
According to figures published by the Agriculture & Horticulture Development Board (AHDB), the UK produced 935,000 tonnes (t) of beef in 2011 as well as importing 381,000t. Exports grew year-on-year to 174,000t, driven by a decline in competition from third countries and an increase in EU activity, the report said.
Despite a healthy export market, the UK is facing challenges from farm input costs, which have risen over the past three years and are predicted to remain “cyclically high for the foreseeable future”, said the report. The addition of a continual battle between current high input costs and consumer demand for cheap proteins has seen many UK beef producers rely on support to supplement income.
However, levels of support for UK beef farmers in the UK are due to decline and the report said: “CAP payments will come with more obligations relating to the environment, production systems and traceability.” The NFU added that any reform that lowers the funding and/or increases restrictions on farm activity will impact the viability of beef farms across the country.
“The NFU vision for the CAP is of a regime that allows farmers to focus on the market while providing a buffer against volatility. A significant amount of the overall earnings for a livestock factor are still provided by the single payment and agri-environment payments,” said the report.
Market volatility
Other problems faced by the UK beef industry in the future, it added, could come from the volatility of exchange rates, which led the NFU to question the current approach of focusing on UK beef exports. “The EU is a valuable market and the threat of increased imports from third countries will be ever-present,” it said.
“World Trade Organization (WTO) trade liberalisation talks and bilateral negotiations, such as the current Mercosur discussions, could [also] lead to more challenges from the rest of the world.”
Pointing out that demand for red meat was particularly prevalent in developing countries in the Far East, the report said that the UK, as a “strong grass growing nation”, was ideally placed to respond to the “bullish” market signals.
