July 22, 2008 - Specialist beef producers, who are at the heart of the Scottish livestock industry, were yesterday urged to treat productive breeding stock as "gold mines" in the face of the prospect of declining supplies for the foreseeable future.

The 2005 reforms of the Common Agricultural Policy, which ended the long-established link between production and support, have resulted in a reduction of the beef-breeding herd in Scotland by more than 10,000 cows in a very short time to little more than 485,000 head.

Two decades ago, the herd numbered in excess of 515,000 cows.

Ex-farm prices for prime cattle are at least 20 per cent higher than 12 months ago, but profits remain elusive and some farmers are cashing in on the high value of cows approaching the end of their productive life. Many of these cattle are being exported to mainland Europe.

Kim Haywood, director of the National Beef Association, is arguing the long-term view. She said: "It appears attractive to sell a good beef cow when she is worth around GBP 700-GBP 800, but if she is able to breed more calves it should pay to hang on to her."

The credit crunch has hit beef prices, with sales of the best roasting joints slipping by up to 37 per cent in the four weeks to 15 June, according to leading market analysts TNS.

But mince is selling well and it would appear less beef will be in the shops before long. Haywood said: "A drop of not much short of 20 per cent in domestic production is expected from August next year because of the decline in the birth and rearing of beef cross calves from the dairy herd. This is forecast to continue as long as milk prices remain at current levels.

The meat trade is speculating that, despite the blip in the market, prime cattle prices will hit extraordinary levels next autumn."

That contention is supported by recent data from the US Department of Agriculture which makes it clear slaughterings of beef cows in the first six months of this year are up by almost 9 per cent. Beef futures on the Chicago market have also risen by 16.4 per cent on the year.