SAC Symposium - Where is the farming industry going - Kev Bevan : Transcript
Ken Rundle: You are listening to an SAC podcast from SAC’s Herd Health Symposium held as part of the VET Trust’s CPD event at Stirling. This event was funded by the Scottish Government under its Veterinary and Advisory Programme or VAS.
The livestock enterprises many vets work with rely heavily on support systems. Changes to the single farm payments are scheduled for 2013 so are these and other changes likely to impact on the industry, vet clients and vet practices? With me I have Kev Bevan, Senior Consultant of SAC Select Services who specialises in farm business management and rural policy.
Kev, what is likely to be happening? Let’s deal first of all with beef.
Kev Bevan: The outlook for beef in the short term is reasonably good. The prices which are currently 318 pence a kilo have been driven by a lack of cattle supply. The dairy beef that was flown into the market is drying up. Big drop in Irish production this year is having an impact and there is limited South American imports coming in. The major concern is on the other side with respect to how much consumer demand will hold up given the likelihood of retail prices increasing so the question is really will the price go that much further through this year? With regards to the sheep industry again an excellent year in the past year for sheep despite the high cost of feed last winter. Looking ahead to this year possibly best to budget on lower margins for the 2011 lamb crop. Main concern is based on consumption. Home consumption is very weak at the moment and export demand is obviously very dependant on the exchange rate.
KR: Both of these are putting pressure on the abattoirs and the cutting plants because they are being squeezed by the supermarkets pushing downwards and the supply driving the price upwards.
KB: Yes, very much so. At the moment the retailers and processors are absorbing much of the increased cost in both cattle and lamb and the key question is how long can they persist with that strategy so there is a concern about the potential impact on the processing sector in particular.
KR: Rolling along the line we have this huge debate at the moment starting to build up about the future of the CAP. All kinds of meetings going on in Brussels and other parts of Europe with various people pitching at the moment for different views on this. A long way to go but how is it looking?
KB: I think that is exactly the point. There is a long way to go. The thought is that it could be 2013 before we get a final answer. The current situation is that the European Farm Commissioner is waiting for the budget to effectively be set for the next 7 year period before presenting his thoughts probably in October. So, the key issue here really is how it is likely to pan out and how Scotland will then apply it. The thoughts remain that there is likely to be a significant budgetary cut and that could have an impact on the single farm payment. The thought is as well that in the next 7 year period Scotland will switch from a historical to an area based payment and that is likely to have a big effect particularly on the likes of specialist cattle finishers.
KR: One word that keeps coming from the Commissioner is this business of public good delivering what the European taxpayer wants and a lot of that is to do with environment and other things.
KB: Yes, the key question there most of that funding goes through pillar 2 single farm payment against pillar 1. The key battle ground there will be whether pillar 2 is sacrificed to maintain pillar 1. There is a lot to play for over the next 2 years.