UK BEEF producers have been warned to keep a close eye on a potentially important political and market developments.

If they do not, they could miss out on a number of opportunities or - worse - face serious threats to their business.

The warnings come from Duncan Sinclair, MLC beef economist, in the Meat and Livestock Commission's annual review and outlook for beef.

He said MLC data for 2002 showed encouraging recoveries in both prime cattle supplies and prices. UK slaughterings increased by 5pc to 2.18m head - not far short of annual levels pre-foot-and-mouth. At the same time, prices rose by 2pc to average 171p/kg deadweight.

"This reflects the growth in demand for processed beef products, in particular, which boosted domestic consumption by 5pc to its highest level since 1992," said Mr Sinclair.

The increase in 2002 cattle supplies did not, however, balance the growth in demand, so imports also rose to about 30pc of consumption. A further increase was projected fort his year as production fell back with the underlying decline in the national dairy and beef herds exacerbated by the loss of cows and calves to foot-and-mouth.

He said the most important development producers need to be aware of in 2003 was the Food Standards Agency review of the over 30-month rule expected in the summer. "This may provide an opportunity to increase domestic supplies by reducing the wastage of beef animals through the OTMS," said Mr Sinclair.

The introduction of the on-farm burial ban across the UK from the end of April could also have a positive import-reducing effect by making a greater number of dairy calves available for beef production.

But perhaps the most significant development for the industry could come in May, if the threshold for the international definition of a high BSE incidence country is raised from 100 head to 200 head per million animals over two years old.

"Such a change would place the UK in the same moderate incidence category as most other EU member states and pave the way for UK exports of bone-in beef once again," said Mr Sinclair. "Regarded by the industry as essential for a real resumption of beef exports, this would be particularly valuable if the recent strengthening of the euro against sterling were to be sustained."

Finally, producers needed to be aware that, if agreement could be reached, the EU Commission's recently published Agenda 2000 mid-term review proposals were scheduled to come into effect in January 2004.

"If they actually do result in an elimination of headage payments, producers must take this into account in any 2003 purchases of suckled calves and stores as it could have a major impact on the value of cattle sold later in 2003 and into 2004," he warned