BSE hits shares by pounds 1bn
Sunday 31 March 1996
Meanwhile, smaller private firms have already started to founder, with hundreds of employees laid off, as talks continue this weekend with the European Commission in Brussels over a compensation and slaughter package.
Chief among the market losers last week were dairy and feed firms, who missed the initial onslaught after the latest scare broke a week last Wednesday. The market as a whole wobbled, along with gilts, over the likely longer-term political damage.
By Friday, pounds 158m had been wiped off the value of Unigate and Northern Foods, Britain's largest milk suppliers, and another pounds 156m off Dalgety and Harrison & Crosfield, which are both important feed suppliers to the farming industry.
Fears that the EC would demand a more drastic slaughter programme than that backed by Britain's farmers continued to dog the shares this weekend.
"The market was slow to twig the effects on the second-order dairy and feed companies. There was some fairly wild selling last week," said Michael Bourke, food analyst at broker Panmure Gordon.
Beef suppliers remain hardest hit relatively, though, with Sims Food seeing nearly a third wiped off its shares, and meat processor Whitchurch losing 17 per cent. Sausage-skin maker Devro was also badly hit over fears that the current scare would cutlonger-term demand for cheap processed food.
Supermarkets have not escaped unscathed, with pounds 527m knocked off the value of the market leaders: Argyll, Tesco and Sainsbury, which halved the price of its beef on Friday.
In all, pounds 1.2bn has been wiped off shares most directly affected. That rises to pounds 1.6bn if Anglo-Dutch giant Unilever is included, though it is still suffering knock-on effects from poor results last month.
Last week, Unilever stopped production of Birds Eye beefburgers and has now removed all beef products, including ready meals, from supermarket shelves.
Private companies have already started to fail. Dundee-based Forfar Meat Traders was one of the first, closing at the end of the week with the loss of 12 jobs after the industry in Scotland and Northern Ireland failed in pleas to be treated differently. "Scottish beef is completely different from English beef. We've got one of the lowest BSE rates in Europe, but that didn't help us," said Forfar director Mark Batchelor.
The beef industry employs around 575,000 people in farms, abattoirs, processing, butchers and road haulage, with thousands already laid off and the prospect of more to come.
"From the information we've had so far, things look very bad. We're looking at anything up to 8,000 people being laid off and, if the slaughter of dairy cattle goes ahead, this number will increase," said Sydney Balgarnie, spokesman for the Road Hauliers' Association, echoing other industry comments.
Analysts said the Government's measures, including banning meat from older cows, had had limited impact on market confidence. Unigate is backing plans from the National Farmers' Union for slaughtering all dairy cows over 30 months old - some 4.5 million cattle - after they reach the end of their working lives. Analysts believe that will boost shares, but with reservations: "It really does depend if it restores confidence. But what we don't know is whether people will now stop eating types of low-quality processed food," said Duncan Fox of broker SBC Warburg.
The crisis has also had big winners - notably turkey producer Bernard Matthews and fish farmer Booker, as well as Electrophoretice, which is developing a test for BSE - but these have so far been just pinpricks in market losses.
Chief market losers
Sims Food -32%
Whitchurch Group -17%
R Wiseman Dairies -8.0%
Harrison & Crosfield -6.4%
Northern Foods -6.2%
Sentry Farming -5.1%
Grand Met -2.1%
Argyll (Safeway) -2.1%
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