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European Beef

A Scottish farmer, Donald McPherson, tells BEEF how the United Kingdom's beef industry is recovering from BSE and FMD.

Donald MacPherson is a cattle farmer near Berwick-Upon-Tweed in Northumberland, United Kingdom (UK). The small community lies on the eastern coast along the traditional England/Scotland border. It's here that the foot-and-mouth disease (FMD) firestorm that raged through the British Isles nearly three years ago ended (see sidebar on page 28).

MacPherson, 32, was born on a small family farm on Scotland's west coast. He studied animal production in college, married and returned home where he rented a farm and raised 400 sheep and 60 cows. After five years, the family moved to the island's east coast just south of the Scottish border where they rent a 450-acre farm raising 90 Aberdeen-Angus cows, 400 sheep and 200 acres of wheat.

About half the farms in the region are tenant farms and half are owner-occupied. Most land has been in the same ownership for centuries — with “titled” people or “hobnobs” still holding ownership. Many inherited the land from people who were never farmers. Rental agreements are normally long-term leases, but MacPherson's lease is a gentlemen's agreement that runs year to year.

MacPherson toured the U.S. and Australia this past summer on a Nuffield Farming Scholarship. One port of call was the Beef Improvement Federation meeting in Lexington, KY, where BEEF caught up with him. In his thick Scottish brogue, and occasional doses of ribald humor, he talked about his business and the future of the UK cattle industry.

BEEF: How did the FMD crisis impact you personally?

MacPherson : I didn't have to destroy any animals on my farm, but the outbreak came within five miles of us. It was the most brutal thing you can imagine — an absolute nightmare. I never want to even imagine living through something like that again.

We were stuck on our farms for months. When movement finally opened up, there remained a lot of controls. Even on your own farm, you couldn't move animals across a road.

Once the Army was brought in it didn't take long to control the outbreak.

Psychologically, it was terrible — it had a huge effect. Everyone was terribly depressed. There were a lot of suicides. Economically, it helped that we had compensation from public money.

BEEF: Did authorities handle the outbreaks properly in your view?

MacPherson : If it had been controlled strictly from the start, it wouldn't have gotten so out of control. On the Scottish side, they got it under control quickly because they used the crisis center in Lockerbie [site of Pan Am Flight 103 crash in December 1988 that killed all 259 people aboard] where they had the logistics for this type of disaster set up already.

On the English side, the vets had to go through London to get permission to kill the animals. They had to deal with people in the Ministry of Agriculture who had probably never been on a farm in their lives. They didn't have a bloody clue as to what was going on.

BEEF: How do you market your cattle today as opposed to pre-FMD?

MacPherson : Everything has changed. In the last 18 months, I've started selling my own beef and fat lambs directly through the local farmer's market. The idea of farmers markets are just starting to take off — much because of what we went through with FMD.

Now, I take my animals to the slaughterhouse, pick up the meat and bring it home for sale. Before FMD, I sold directly to an abattoir that slaughtered and processed the animals and sold the meat. When we were hit with FMD, that market went away.

After the crisis, we had all these animals and no market, so we began selling our animals “in the meat” directly to our neighbors. People kept coming back, so we decided this was the way to go. It's not many animals, only four or five per month, but it's a start.

Our meat is sold fresh, cut down and pre-packed by the processor. At the moment, we're not supplying hotels or restaurants. At some point, I want to sell directly to those places and to butcher shops in Edinburgh, maybe even through the Internet.

We've developed our own label called “Well Hung and Tender.” No kidding. Figure that out for yourself. The guys come around and everybody points at it and laughs, and the women buy it. It gets a lot of attention.

BEEF: Describe how your production subsidies work and their effect on your economics of production?

MacPherson : For years now, our subsidies have been paid per cow and per male calf. We get approximately 120£ ($188)/cow/year and 88£ ($138)/steer at eight months of age and another 88£ when he reaches 20 months. We also get 89£($139)/acre of arable land and sheep bring in 13£($20)/ewe.

The older beef cows aren't worth much beyond the subsidy as currently nothing over 30 months gets near the food chain. That's a BSE prevention measure. Old cows are killed, hung, dried and burned in power stations.

They may start gradually raising that 30-month age limit at some point, but it will be raised slowly over time.

BEEF: Is appears the subsidies are driving the business, rather than supporting farmers. Is that right?

MacPherson : No question about it. The subsidies encourage people to keep cows until they're too old to be of economic value. Slaughter animals are often too old and tough to make good meat. Most steers are sold at 20-23 months of age. That's a bad thing.

We have to jump through a lot of hoops to get the subsidy payment. The paperwork is a maze and, if you make one silly little mistake, you get severely penalized. A lot of people don't get the subsidy they're entitled to because they don't or can't do the proper paperwork. I spend 2½ days/week on average just doing paperwork to satisfy the subsidy requirements.

Short term, there are European Union (EU) directives coming out that will switch our subsidies from a production base to a social subsidy (see page 32). As far as beef is concerned, when they do that no one is going to keep cows because they're not profitable. The proposals are to take any production link away from the cow and just give it to farmers as a check once a year. You can do whatever you want with it — you don't have to keep any cows as long as you keep your acreage of land.

Under the current proposal, I think we'll only get 250£/animal to get rid of our cows.

What we need is a market-based livestock economy to keep people farming and get people in Europe back to eating beef. Long term, we need to get rid of all subsidies. The World Trade Organization will eventually see to that, though.

BEEF: With that, what do you see is your future and the future of the UK livestock industry?

MacPherson : We've gotten over BSE and we're getting over FMD. But in the larger sense, the cattle industry is still in a bit of a bad way — and it's really a larger EU agricultural problem.

In the majority of cases today, without the subsidy, we have no economics. The problem is land prices are so high that we have to house our cows for six months — yes, actually put them inside a barn — because we don't have enough land for grazing during the winter.

Most people are too heavily stocked, but they do it to get more subsidy money. But then, they have to pay so much to feed the cattle over the winter. It's a vicious circle.

Short term, the loss of a subsidy system could be a problem if people sell their cows and don't get back into the business. We could lose our slaughterhouses. If they shut down, our industry is finished. If they phase out subsides over time, I think we'll be okay.

Once we start producing for the market, the returns will go up. Right now, all of Europe is producing to collect the subsidy. Once the subsidy is closed, we'll get closer to the consumer and then produce what they want. We'll be able to add value and meat demand will go up.

BEEF: What's your assessment of the value of your compulsory “passport” animal ID system — both pre- and post-BSE/FMD?

MacPherson : It's a good idea; it was inevitable. But the paper-based route, rather than going electronic, was bloody stupid. I think we'll follow suit with countries like Australia before long and go electronic.

We had to keep movement books before BSE — but not passports. Now, we have passports that accompany each animal wherever it moves. It's got an eartag number, sex, breed, age information, etc. The passports are like checkbooks — and you send a “check” into the government agency each time the animal moves. Sometimes, it takes two months for the passport to get processed — that's the problem with paper.

Then, if any little thing goes wrong with the records, the animal doesn't go into the food chain and you don't get a penny for it. If the eartag doesn't match the passport, you don't get your subsidy, either. It's very strict.

You in the U.S. are being forced into it, too. Individual ID is inevitable for you.

BEEF: Does the UK import beef?

MacPherson : Yes, mainly from Ireland, but also Australia, Brazil and Argentina. Brazilian beef goes into food service, not high-quality places. It's cheap but not high quality like that from Australia.

Imports are cheaper than domestic product because our production costs are so high. But imports fill a demand we can't meet. Once we get to a market-driven point, it will be critical that we limit imports.

To compete against imports, we need to brand our products, to identify our beef according to region, to add value. We should be selling beef based on quality. People in the UK basically trust “local” beef from people they know raised it properly. We only import now because of our problems with BSE and FMD. Generic UK beef is still suspect by some people.

BEEF: Will Europeans ever accept U.S. beef imports?

MacPherson : No. No way. Even if the trade rules become such that we're forced to allow U.S. beef into the EU, no one would buy it due to the hormones. Consumers don't understand hormone treatment in cattle.

For years, the government has told consumers hormones are adulterations, and that's how they'll always be perceived.

And, it's the same with genetically modified crops. They don't want them.

BEEF: What impresses you most about the U.S. cattle industry?

MacPherson : So much of your cattle breeding is highly performance based. We have some performance systems in breeding stock, but so much is based on visual appraisal.

It's hard to criticize your system when ours is such a mess. I think your beef system is far more customer based. I don't think you're far from getting a true, value-based pricing system, at least for market-ready animals. You have a great country and a great agricultural system. You should appreciate more what you have.

A Chronicle Of The UK Crisis

On Feb.19, 2001, a routine veterinary inspection at an abattoir in Essex, near London, showed “highly suspicious” signs of foot-and-mouth disease (FMD) in 27 pigs. The next day, the Ministry of Agriculture confirmed the outbreak and set up a five-mile exclusion zone around the abattoir, and two farms in Buckinghamshire and on the Isle of Wight that supplied the pigs.

A day later, the British government banned all exports of live animals, meat and dairy products. Meanwhile, the European Commission announced a ban on exports of all live animals and animal products from Britain.

By February 24, the UK's chief vet, Jim Scudamore, announced the slaughter of thousands of pigs and cattle on eight farms across England in an attempt to wipe out the disease. Ag ministry workers began constructing a pyre in Northumberland to destroy 800 slaughtered pigs.

On March 18, confirmed FMD cases topped 300 and the British government admitted it had no idea when the crisis would end. On April 5, confirmed cases rose to 1,025, and more U.S. vets arrived in Britain to help keep the slaughter policy on track. Soldiers involved in combating the disease doubled over the next two weeks to 2,900.

By April 26, the tide turned and the policy of destroying healthy cattle on farms neighboring infected farms stopped. On May 17, no new cases were reported.

More than 10 months after the start of the outbreak, the last remaining suspected area, Northumberland in northeastern England, was given the all-clear. Britain was free of FMD.

In total, the number of confirmed FMD cases topped 2,000, with 4 million sheep, pigs and cows slaughtered. A government report estimated the cost to the British economy at $3.5-$5.9 billion. The cost in direct compensation to farmers was more than $3 billion.