THE BSE RISK: Markets plummet in wake of scare

It was not business as usual yesterday at the cattle market in Banbury, Oxfordshire, as farmers saw profits tumble in the auction ring. What should have been the busiest day of the year so far turned out to be the worst.

As farmers herded unsold prime beef cattle into lorries, the pain of counting the costs of the latest BSE scare was all too evident on their solemn faces. In the morning, they had watched in dismay as an auction of around 600 heifers and steers worth pounds 650,000 on a normal day, fetched under pounds 200,000. Nearly half the livestock went unsold.

However, as the value of beef cattle dropped the price of pigs and sheep rose amid expectations that consumers will change their eating habits.

Jim Watson, managing director of Midland Mart, which runs the auction, said: "This scare spells disaster for the farmers because a lot of them are already having trouble breaking even. Everyone is so despondent because they know recovery will take a long time."

The price of beef cattle at Banbury fell yesterday from an average of 120p per live kilo to 100p, resulting in a loss for the farmer of around pounds 130 on each animal.

This was reflected acrossBritain. Many farmers held back their cattle as prices plummeted. On average prices were down pounds 125 per head, from pounds 725 last week. Small farmers - already on tight profit margins - face bleak prospects.

Mr Watson attacked the Government for failing to act as soon as "mad cow disease" was first detected in 1980s. "Farmers are picking up the tab for the Government which mishandled this from the start. When BSE was rife the Government should have taken infected cows out of the system but they were too worried about the cost."

Around ring two in the auction area, traders stood with hands in pockets, where their money was staying. One said: "We are reluctant to buy because we do not know if there is a market. The scare has shattered the confidence of the industry but it incenses me because we all stopped selling the bovine offal in 1989."

Farmers shook their heads in despair as it became evident they were not only taking less money home but cattle that was ready for sale. Richard Cottrell, who had brought 20 animals to sell, said: "I got pounds 9,000 last week for 10 animals. With the price down by about 15p a kilo I can only expect about pounds 7,000-pounds 8,000 this week for the same number. I have to sell the today otherwise they will get too fat."

He added: "It is doom and gloom here. People have a right to know about new scientific evidence but they should not stop eating beef. This cattle is safe."

Norman Thomas, who enjoyed spaghetti bolognese with his 12-year-old daughter and son aged 15 after the new evidence of a link between the human form of mad cow disease and infected beef emerged, said: "This is prime beef. There is no risk whatsoever."

Mr Thomas, who has a farm near Highworth, near Swindon, with around 200 beef cattle, was more optimistic. "I have sold eight animals today and am down pounds 50 to pounds 75 on each but I have made a small profit. We will still make money but it will be less than before."

He pointed out that most farmers will keep their heads above water because they practice mixed farming. Some will be able to balance their books owing to the increase in the price of pigs and sheep.

In the bar, away from the gloom of the auction, pints of beer failed to lift spirits - it was left to rounds of beef sandwiches and plates of roast beef and Yorkshire pudding to do the trick. Barmaid Vivienne Booth had shifted 152 beef sandwiches by lunchtime. "They cannot get enough of them," she said.

Upstairs in the restaurant, a succulent shoulder of pork was noticeably untouched. Caterer Patricia Bott, busy carving a rapidly diminishing joint of beef, said: "It's an act of defiance. The farmers are eating it in principle because beef is their livelihood."

Asked whether it was safe to eat she replied: "I certainly hope so, with the amount the farmers have been getting through."