Economy braced for shock as beef goes off the menu

IRISH beef producers are facing into a winter of uncertainty as both domestic and international demand for their product continues to fall. Industry try sources forecast that total exports - the backbone of the beef business - will be down by 5 per cent this year, with a substantial amount of beef going into intervention.

The row with Russia, which has dropped three Irish counties, has further added to the serious crisis in consumer confidence. The ability to trace beef through its breeding and production process will be the key to regaining customers, according to An Bord Bia.

Overall, An Bord Bia expects Irish beef exports to fall by about 5 per cent this year to about 410,000 tonnes with a further 60,000 tonnes to be sold into intervention.

Cattle prices have dropped by about 20 per cent in the past year, beef consumption has fallen on domestic and export markets and European consumers are moving away from imported beef, in favour of locally produced meat.

This week in a move to try to restore consumer confidence in beef and other foods the Government has agreed to set up a Food Safety Board. The board's primary concern will be the protection of public health and it will have an annual budget of £2 million.

In France, Ireland's largest market in Continental Europe, beef imports are expected to fall by 25 per cent this year with consumption expected to be 8 per cent down on 1995 levels.

And then there are the problems in Russia. The outcry from Irish farmers when Russian buyers rejected beef from three Irish counties indicates the increasing importance of the Russian market for Irish beef producers.

Russia has been the main international market outside the EU for Irish beef this year. It has become a very important market, as demand from EU and other countries has fallen.

The rejection of beef from particular areas by these buyers gives rise to the danger of creating a precedent which, if followed by other customers, could be very damaging for Irish farmers and the Irish beef industry. But the outcry also betrayed the lack of a consumer-oriented approach by Irish farmers.

As a spokesman from the Irish Master Butchers Federation put it: "The Russians are customers like anyone else. It's what they want that matters. Farmers will have to realise we have no right to tell customers what they should buy. Farmers must realise that the consumer is king."

Beef is big business. There are 28 slaughtering facilities and five boning plants serving the Irish beef sector. Some 4,875 people are employed. Employment is now estimated to have almost returned to pre-BSE crisis levels, according to Forbairt. Many plants moved to short-time working at the height of the slaughtering season last spring, but there were no large scale redundancies, a spokesman said. Output from the sector is estimated to be worth £1.25 billion.

The processed meats sector, including products made from beef or beef derivatives, has been one of the areas worst hit by the BSE crisis. It is estimated to be worth £100 million and employs 2,172 people. Burger manufacturers have been the most severely hit, with Irish and British demand down 25 per cent.

With the number of BSE cases now running ahead of last years levels, the outlook for the industry is uncertain. So far this year live cattle exports - the other main outlets from beef processors for farmers - have fallen by 52 per cent. But slaughtering levels have risen because of the fall in demand for live cattle exports. the reintroduction of intervention and some hold-over of animals from last year.

The issue for the industry now is how to rebuild consumer confidence. An Bord Bia suggests that the industry could help itself by putting "reliable structures" in place to facilitate product traceability from the farm to the table.

Family butchers echo the importance of giving customers what they want. A spokesman from the Irish Master Butchers Federation said domestic demand for beef has fallen by 10 per cent over recent months and continues to slide. But he maintained that the fall in demand is not merely due to the BSE crisis.

The BSE crisis has been good for some firming sectors: poultry and pork have done very well. Employment in the poultry processing sector has risen from 1,750 in 1989 to 2.300.

Access to international markets and conditions of access to intervention are now crucial issues for the future of the Irish beef industry in the short term. In the longer term the industry will have to work hard if it is to win consumers back to beef.