Beef's future: Bleak prospect for unhappy farmers

Britain's beef farmers won an pounds 85m emergency support package from the Government last night after their campaign of lobbying, port picketing and protest. But, say Nicholas Schoon and Stephen Goodwin, farmers face an uncertain future.

Big changes are coming to British beef farming, Jack Cunningham, the Minister of Agriculture, told the Commons yesterday. He is looking to set up an early retirement scheme, and insists their subsidies will be cut.

But in the same statement he announced an extra pounds 85m to help them over the coming year after they suffered a huge drop in income in 1997. This was mainly because of the strength of the pound, with the BSE crisis a lesser factor.

There was over-supply of beef throughout Europe and a long-term decline in sales, he said. Furthermore, as BSE was eliminated from cattle herds in the United Kingdom the special compensation farmers had received from taxpayers to help them cope with the economic impact of the disease would disappear.

The great bulk of subsidy for beef farmers and others are agreed collectively by Europe's farm ministers as part of the European Union's Common Agricultural Policy. Britain has limited scope to cut subsidies unilaterally; if it did so it would be disadvantaging its own farmers compared to their European counterparts.

Britain under both Tory and Labour governments has argued strongly for major reform of the CAP and big subsidy cuts. But the UK has trouble finding support among other European governments, who are much more relaxed about featherbedding farming.

But Mr Cunningham does have discretion with the special extra payments made to hill farmers to support their livestock rearing on poorer land in a harsher environment - the Hill Livestock Compensatory Allowance. He also has discretion over the amount of money they are granted to compensate them for a strong pound, which makes beef imports cheaper and depresses market prices.

Yesterday's statement was a clear signal that while he was increasing both in the short term, he would cut them significantly in the next few years - with the option of early retirement for farmers who felt they could not cope. The National Farmers' Union said a retirement package had been a "long-term aim" and it was ready to discuss a scheme with ministers.

William Jenkins, a South Wales hill farmer, said traditional hill farmers could no longer hope to make a profit from rearing calves and lambs and selling them in the autumn.

"We have people in our area who are in serious financial trouble and quite frankly this package is not going to get them out of it," Mr Jenkins said. He favoured gearing support more towards protecting the environment.

The extra help will mean about pounds 37 per suckler cow, worth about pounds 800 to an average lowland suckler cow producer with 22 cows, and pounds 1,400 to an average hill farmer with 38 cows. In addition, hill farmers will get an additional payment of pounds 10 - pounds 11 per cow and approximately pounds 1 per breeding ewe.

Stephen Rossides, head of the NFU's livestock department, said Mr Cunningham had brought to a head the need for farm policy across Europe to become more market-oriented with food prices brought down to world levels.