The beginning of the end or the end of the beginning for the BSE crisis?

Abstract

The BSE crisis raises doubts about the sustainability of current levels and patterns of beef production in Northern Ireland, a region with a heavy dependence on exports. This paper employs a regional input–output model to determine the full effects of a permanent fall in export demand for beef on regional output, income and employment in farming and the wider economy. The scenario examined, which assumed the withdrawal of Intervention buying, illustrates the dependence of the beef industry on BSE-triggered market stabilisation measures, without which more than 5000 jobs and £68 million in income would be threatened. The countervailing effects of possible increases in demand for beef substitutes are shown to offer relatively limited opportunities for employment: 600 jobs and £9 million in income. In view of the extent of the dislocation caused by BSE in the regional economy, it is concluded that rather than try to sustain the existing pattern of production with the present mix of support measures, additional agricultural and rural development policy responses are required. The logical aim of the new measures should be to promote structural adjustment in the beef sector, thus enhancing competitiveness by improving underlying regional comparative advantage in beef production and processing.