Is the future fixed?

Farmers and meat processors were permitted a small cheer last month as the first over 30 month old (OTM) cattle to enter the human food chain in 10 years made their way through Anglo Beef Processors' (ABP's) Shewsbury killing plant. The loud hurrahs are being saved for when the Brits finally return from the export wilderness to which they were exiled by the European Union in 1996. And that day might not be too far off, according to Richard Ali, chief executive of the English Beef and Lamb Executive (EBLEX).

"We don't have a real market until we have got back into exports," says Ali. "It's not going to be a pushover, but there are buyers out there and we will be able to provide a product at the right price and the right specification."

While Europe is unlikely to stamp UK beef's passport until next spring, the 60 sides of beef hanging in Shrewsbury have to be good news for an industry that desperately needs to lay old ghosts to rest if it is to address the deep veins of suspicion, inefficiency and if farmers leaders are to be believed profiteering that threatened this year to tip a long-running disaster into a full-blown crisis.

With farm gate prices 20% down since the beginning of the summer and fears that producers would use Common Agricultural Policy reform as an excuse to leave the industry in spades exposing the supermarkets to a consumer backlash processors, retailers and farmers finally hammered out an agreement around farm minister Lord Bach's table in October.

It was, in food and farming commissioner Sir Don Curry's words, an "honest" attempt by all sides to address the problems that had pushed beef farmers to the brink of despair although, as one insider put it "the pressure came from government there was a lot of squealing. And the outcome to observers, at least appeared more a triumph for government spin doctors, than an answer to the criticisms that had raged in the previous six months, with a somewhat tame joint statement giving an impression of forced bon homie.

Fixed price contracts

Curry doesn't believe in quick-fix solutions, but on one point he remains firm: processors and retailers must move to fixed price contracts if primary producers are to be given the confidence they need to stay in business. "If Waitrose and Somerfield can do it, others can too," he argues.

Nobody disputes the logic: in no other manufacturing industry do you spend three years producing a product for which you do not have a known market, let alone a selling price, and nowhere is the continuity and consistency of a raw material so unpredictable. Fixed price, long term contracts would give both buyers and sellers the stability they need to plan ahead. This is one of the reasons behind Grampian Country Food Group's St Merryn Meats introducing a similar scheme last month for producers selling into Tesco's Finest and Organic ranges. Asda, meanwhile, is said to be discussing extending its production-plus-cost contracts, from the dairy and root crop sectors, into beef. But according to Anglo Beef Processors, one of the UK's biggest supermarket own-label meat processors and a major supplier to foodservice, including Burger King; it is farmers who are reluctant to commit.

"Our experience has been that farmers have not shown enthusiasm for long term contracts in the past. They have been reluctant to consider a fixed price in a market that is volatile. Processors would have an open mind on it," says a spokesman.

While their leaders call for fairer returns, he says farmers "are not fools and they are already responding to complex changes in the marketplace, presenting more young cattle for slaughter at higher weights, as they restructure their businesses in the new subsidy-light era. Meanwhile, prices at the autumn store cattle markets defy economic gravity with bids for the best beasts destined for meat plants next year when top grade cattle are tipped to be in strong demand belying the industry's parlous state and indicating more confidence in the future than farmers are given credit for. Which is just as well, because tumbling out from the beef summit came £8m in grants towards building a better beef industry.

The money, which will be used by EBLEX and the Red Meat Industry Forum (RMIF) a joint initiative between retailers, manufacturers and producers includes £1.5m over two years to persuade slaughterers and secondary processors to adopt lean manufacturing techniques, including the 'right first time' principle. Meanwhile, following an inspirational presentation by Land Rover chief Bob Dover to 15 meat bosses in October, more workshops are planned to inspire what RMIF general manager Martin Grantley-Smith terms a "culture of improvement among top execs"

Following closely behind is a Young Leaders Initiative to address the chronic retention shortage among middle and upper management in the meat trade. And there is a three-year programme to encourage whole chain development.

"It's a difficult area, admits Grantley-Smith. "But we want to get all the members of the chains together to see, as a group, how they can improve competitiveness.

Right specification

Meanwhile, EBLEX's Richard Ali will be concentrating on restoring lost foreign markets and improving beef returns through marketing and training (see box).

"Producers are best served by providing animals at the right specification. The more we have peas in a pod going in, the easier it is for abattoirs. By producing over fat cattle the sector is losing £12.5m a year. No one wants it, you pay to have it trimmed off and then you have to pay to get rid of it. Farmers and abattoirs need to work together."

By far the largest chunk of cash - £5m - is to be used to promote exports, indicating the importance industry leaders attach to getting processed beef out of the country before oversupply sends prices nosediving. The lifting of the OTMS, it is hoped, will signal to foreign buyers that the Brits are coming.

With 40% of the UK beef market tied up in mince for processing, no one can predict what impact the return of older cattle to the food chain will have on price. But ABP Shrewsbury, one of a handful of plants licensed to kill older animals, believes it will displace imports of forequarter meat, while hindquarters from older cattle will end up overseas. Its predicted "large volumes of OTM meat will only become a reality, however, if prices match and beat the government's existing older cattle waste disposal scheme, which will run until next year.

After several years of forced optimism, industry leaders are now hopeful that the British beef market will rise above the current 65% self sufficiency levels and put a concrete floor in place of the shifting sands that have bedeviled the industry."It will help businesses to plan for the future," says Ali, "rather than being in this moonlit green scenario that people have been in for the last few years." FM

National beef training centre

While farmers are being encouraged to move up the food chain, at Askham Bryan College in York meat processors are moving down.

The choice of an agricultural college campus to host the new £1.5m National Beef Training Centre a flagship facility for both the farming and processing industries was a clear signal that collaboration is key to the future of both.

"Opportunities are often best when the situation is at its worst," says college principal Gareth Rees, who sees the centre as an opportunity to improve understanding between primary producers and secondary processors, with a range of courses built to respond to specific industry needs.

"No one is championing training in the beef industry. As a land-based college, we have to be prepared to invest in the food industry's infrastructure," says Rees, who responded to an approach by Rose County Foods, based near Clitheroe, which slaughters and bones 1600 cattle a week.

"We had extensive discussions with Rose County Foods, Sainsbury and Dungannon Meats," says Jonathan Birnie, now agricultural and research manager for Dungannon, who helped write the Askham Bryan courses.

"The big problem is that we have an ageing industry and one that is not particularly attractive to young people.

"Unless they have been brought up with it, they don't have an understanding of it, and generally those that do only understand one part of the chain.

"It's the whole chain approach that allows people to problem solve," says Birnie.