Beef farmers are calling on retailers to increase payments or risk a severe drop in production.
The National Beef Association warned that retailers would not be able to rely on sufficient home-killed beef supplies from 2008 if the situation remained the same.
Robert Forster, NBA chief executive, said: “We are worried retailers have still to realise that if they do not pay their contracted slaughterers sufficient money for them in turn to be able to give farmers enough to cover production costs, there will be a dramatic drop in output three years later.”
He said once decoupling came into effect next January, breeders would only continue with current production levels if they got a strong price indicator from buyers.
“The signal has to come in 2005 otherwise the beef supply system will begin to shut down in three years,” said Forster.
“We hear some slaughterers insisting that it is the market which will decide prices. We take this to mean they are determined to keep cattle value as low as possible.
“We would prefer them to take a less shortsighted view. Unless they pay enough in 2005, in 2008 the beef they say they want will simply not come forward in anything like the volume they would like.”
He said that UK beef was produced to standards that were impossible to recreate in South America and other cheaper sources.
Meanwhile, however, the MLC said UK beef production was set to rise by 4% during 2004. Economists said the bulk of the rise would be in the second half of the year, and estimated beef imports would fall 4% to 310,000 tonnes.