McDonald's holds key to price recovery

By Robert Forster

The Scotsman; 22nd May 1997

THE MOST optimistic outlook for beef farmers is that there will be agreement in Brussels this year to ease the ban on a limited volume of specified beef and that this will persuade the McDonald's restaurant chain, which used to take about 8 per cent of British beef production, to return to the UK market.

But politicians in other EU member states are still unhappy at the relatively high level of BSE being reported in this country and about the threat of CJD, the human equivalent, while McDonald's sales have actually gone up in the past year using imported beef.

The most recent statement by the Spongiform Encephalopathy Advisory Committee (SEAC) was relatively hopeful, although it still implied that the export ban is unlikely to be lifted for at least two years.

Professor John Pattinson, the SEAC chairman, said the science of BSE and CJD has become relatively clear, meaning politics and the way the UK industry presents itself to its EU partners are now more crucial.

"We feel fairly confident about the number of BSE cases falling to around 72 by 2001, he said at a conference in London. "However, estimates may still be uncomfortably high at 4,111 this year and 1,864 in 1998 and our European partners may not be prepared to lift the ban." There were also signs that CJD in humans would not be as widespread as had been first thought.

"So far this year there has been one death and two people are still alive and if the number of cases for 1997 is confirmed at 10-15 cases then the epidemic is likely to be confined to 100-200 over ten years," said Prof Pattinson.

It is agreed that the return of McDonald's to home-killed beef could eventually put up to #50 on the value of a slaughter steer because it would raise the value of heavily-discounted flank and forequarter beef - much of which is unsaleable and is being frozen down by abattoir owners and put in private store.

The bad news for British beef farmers is that McDonald's UK sales, using only imported beef, have soared since 20 March last year. "This has persuaded McDonald's to take the view that if it ain't broke, don't fix it", explained David Walker, chairman of McKey Holdings, the exclusive supplier of beef to McDonald's in the UK.

McDonald's sales had plunged in Germany and were poor in France and Denmark. "However, UK McDonald's is the star of this situation and although the management has every confidence in British beef it must do what its customers want," said Mr Walker.

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