UK farm businesses still smarting from BSE crisis

Bovine spongiform encephalopathy, or mad cow disease, carries a sting in the tail. Four years after BSE was first identified as the probable cause of a fatal human neurodegenerative condition, triggering the worst food scare in living memory, UK government scientists two weeks ago revealed that apparently healthy cows, pigs and sheep may also be carrying contagious forms of the disease.

Sir John Krebs, head of the UK's fledgling Food Standards Agency - a body that largely owes its existence to the BSE crisis - was quick to assert that existing controls are enough to guarantee the safety of UK beef even if the latest findings are confirmed.

However, the episode will have done nothing to restore consumer confidence. This point was reinforced by French agriculture minister Jean Glavany, who said in an interview on August 28 that a relaxation of France's ban on UK beef imports remains "out of the question" for the moment.

Glavany's iron determination to keep UK beef off French dinner plates is all the more remarkable in view of the intense pressure that Paris is under to repeal its ban. The European Commission, having accepted that controls introduced over the past three years are enough substantially to eliminate BSE, lifted its blanket ban on UK beef exports in August 1999. The Commission has since started legal proceedings against France, arguing that its embargo breaches the principle of the free movement of goods within the EU single market. The court case, which won't come to an end until next year, could culminate in multi-million euro fines for every day that France maintains its ban.

The National Farmers Union, meanwhile, has launched its own private action against the French government. The federal German government, which was also initially reluctant to readmit British beef exports following protests from regional German administrations, fell into line rather than face legal proceedings.

As France was by far the largest export market for UK beef in the pre-BSE days, accounting for 30% of total overseas sales, its continued reluctance to do business is a blow to the industry. On the other hand, export demand for British is so poor post-BSE that it often seems as though repealing the EU ban has had no effect whatsoever.

Official statistics from the Meat and Livestock Commission, the body responsible for promoting UK meat abroad, put UK beef exports in the year since the EU ban was formally lifted at zero. MLC officials say that the true figure is somewhere in the region of 500 tons, generating total revenues of 5 million pounds. Small, one-off shipments to restaurant chains and speciality butchers channelled through just two export-licensed abattoirs in the UK account for the vast majority of this. These abattoirs, keen to protect the identity of their buyers for fear of losing them to competitors in Ireland, where the incidence of BSE is low, are cagey about their export activity.

It's all a far cry from the glory days of 1995, the last full year's trading before the EU imposed its export ban on March 20 1996. That year, the UK produced 973,000 tons of beef, of which over 270,000 tons were exported, with export revenues totaling over 520 million pounds.

However, the full impact on beleaguered UK beef farmers doesn't stop at the loss of export earnings. Domestic demand for beef also dropped through the floor, causing a price slump from which the market still hasn't recovered. In February 1996, one month before the health risk of eating BSE-infected meat was made public, UK beef fetched an average price of 1.20 pounds per kilogram deadweight. By October 1998, the average price had fallen to just 79 pence per kilogram.

MLC officials put a brave face on the situation, pointing out that only two abattoirs in the UK currently comply with all the exacting conditions necessary to obtain export licenses. They talk of the need to seek out niche markets for high-value added products, but also candidly admit that "it's a question of starting from ground zero."