Meat producers fight against falling prices

They are searching for champions to support their fight against large retailers driving down prices, but Britain's meat producers and processors could be disappointed with the new ministerial team within the Department for Environment, Food and Rural Affairs (DEFRA).

Great faith has been placed in the new Secretary of State David Milliband, and farming and food minister Lord Rooker to fight their corner in the battles that lie ahead - including the Competition Commission (CC) enquiry into the grocery sector and trade reform at both European and world levels. But hopes could be dashed once the new ministers have got to grips with their new briefs.

National Farmers' Union president Peter Kendall feared that the comments made by Office of Fair Trading chief executive John Fingleton about letting UK producers go to the wall if it encouraged lower consumer prices - made following his referral of the grocery sector to the CC - would provide a “green light for retailers to reduce retail prices by squeezing producer margins”.

Already, Rooker has put back the date for DEFRA's response to Rosemary Radcliffe's review of the various levy bodies, including the Meat and Livestock Commission (MLC). This is not now expected until the end of June. And, despite initially warm words from Milliband about agriculture being crucial - described by Kendal as “a sea change from before” - there is also uncertainty about whether government will ultimately accept the argument about the strategic nature of the sector.

Britain's beef producers and processors, which have experienced huge competition from countries like Brazil, where exports have doubled over the past 10 years, could face opposition should they lobby to get included within the European Union's 'sensitive products' list. Sensitive products would benefit from more favourable protection from international competition under the reform of the Common Agricultural Policy (CAP) and new rules being negotiated as part of the World Trade Organisation talks. “We accept that we can't be the cheapest producers of beef and lamb, but we can be the best,” said Kendall.

“Government policy is that it wants to keep sensitive products to a minimum,” said Brian Harding, DEFRA's director of sustainable food chain, at the British Meat Processors Association (BMPA) annual conference. Harding admitted there was “loads of uncertainty” regarding the outcome of the negotiations, which is expected towards the end of this year.

BMPA president and md of meat processor Tulip UK Gerry Finley responded: “I can't help seeing the irony that beef might be a sensitive product - over the past 10 years it has been a sensitive product.” This view was supported by Kendall who, while welcoming the “good signal” sent out to producers by the recent lifting of the over 30 month rule for cattle, called for continuing support for the sector under CAP reform: “The price of beef was well below the cost of production.”

MLC chairman Peter Barr added: “I am really concerned about the long term viability of our processing sector … you probably need a 5% increase just to stand still, but you are faced with continuing downward price pressure.”