A PROPOSAL by the French Food Standards Agency could have major implications for British sheep exports.

The agency wants to ban spinal cords from all sheep aged over six months.

Mr Duncan Sinclair, of the Meat and Livestock Commission, spoke about the proposals to Durham grassland society.

He said mutton which currently went to France had the spinal cord removed in French abattoirs and the French FSA wanted to expand this to all sheep over six months of age.

However the French meat trade, which was keen to receive British exports, was fighting the plan.

"It is a big issue and is one I hope will be resolved pretty speedily so that we know what the trading environment is going to be," said Mr Sinclair.

French importers were keen to receive British lambs but, he believed, the French FSA was caught out when it said there was no BSE in the French herd - and then found there was.

"I suppose this is an opportunity for them to be ahead of the game which would not only affect imports from here but the Irish and their own domestic lambs as well," he said.

"The alternative may be instead of dealing in carcasses to deal in cuts."

The French have a lot of cutting plants and the trade would prefer them to carry out that work.

"But it may be that if there is no resolution then our abattoirs may have to cut to French specifications, which may be slightly different to ours."

It could also lead to extra costs for producers to meet the expense of the cutting and of spinal cord disposal.

Mr Sinclair spoke of the low numbers of sheep and lambs following foot-and-mouth and the welfare disposal scheme.

There were regional variations of the number of lambs on the ground but the 2002 lamb crop was expected to be down because of an estimated 3m drop in ewe numbers.

The UK breeding flock was down to between 15.5m and 16m head and it could be autumn 2002 before there was any significant recovery.

Slaughtering was down from 16m last year to 11.8m this year. In 2002 it was expected to be 12.3m.

"What is critical is that the exportable surplus we will have in future years will be significantly lower because of the low production levels," said Mr Sinclair.

He was also very concerned about the cattle sector.

UK prime cattle slaughtering was down following a massive change in the marketing mix.

There had been a 14pc rise in young bull slaughtering and a "wholesale raid" on potential young heifers for re-stocking.

It was assumed that 800,000 cattle were lost to foot-and-mouth - 180,000 heifers and cows; 140,000 suckler cows and heifers; and 480,000 slaughter age cattle.

The breeding herd had fallen significantly; dairy was down approximately 13pc and sucklers down 15pc over the last two years.

UK prime cattle slaughtering had fallen 17pc in 24 months.

"This is a pretty scary figure and one we as an industry should do something about," said Mr Sinclair, who said UK prime cattle supplies were around 2.4m in 2000 and 2m this year.

He forecast they would fall to 1.9m. next year.

He predicted trouble for the processing sector over the next few years with fewer cattle and 2.5m fewer lambs.

The reliance on imports for consumption had already risen from 20pc in 2000 to 30pc this year. Mr Sinclair expected them to rise to 40pc in 2002.

"Any industry that relies on that level of imports is in a pretty serious state," he said.

"The industry must see how it can combat this. The industry is at a cross roads - do we sit back and let imports take over, or do we see exports increase."