THE BSE crisis ensured that 1996 was a bad year for Irish beef producers and they face an uncertain future as the number of BSE cases continues to rise.

Cattle prices have dropped by about 20 per cent in the past year, beef consumption has fallen on domestic and export markets and European consumers are moving away from imported beef in favour of locally produced meat.

The difficult times for Irish farmers look set to continue as both domestic and international consumers remain concerned about the safety of beef and those concerns start to extend into other meat products.

Bord Bin advises that the key to regaining consumer confidence is to ensure that beef can be traced through the breeding and production process.

The Government has set up the Food Safety Board with an annual budget of £2 million and the primary objective of protecting public health.

Net farm incomes are expected to be about £100 million lower this year than in 1995 because of the BSE crisis, according to Goodbody Stockbrokers. It predicts that net farm income could fall by up to £130 million if intervention is needed on a wide scale in 1997.

These income reductions are equivalent to a drop in the growth of gross national product of between 0.7 per cent and 1 per cent. Last year, agricultural incomes amounted to £2.25 billion of which £1.7 billion came from EU supports.

Industry sources are forecasting that total exports - the backbone of the beef industry - will fall by 5 per cent this year with a substantial amount of beef going into intervention. Bord Bin expects beef exports to fall to about 410,000 tonnes with a further 60,000 tonnes going into intervention.

In France alone - Ireland's largest beef market in continental Europe - beef imports are expected to fall by about 25 per cent this year and consumption is expected to be 8 per cent down on 1995 levels.

Much of the Irish beef that is sold to export markets will go to lower margin markets such as Russia. The row in the autumn after Russia refused to accept beef from three counties in the Republic added to the concern about the outlook for the beef industry.

Beef is big business. There are 28 slaughtering facilities and five boning plants serving the sector. Some 4,875 people are employed and annual output is estimated at £1.25 billion.

The processed meats sector, including products made from beef or beef derivatives, has been one of the areas worst hit by the crisis in consumer confidence. This sector is estimated to be worth about £100 million and employs 2,172 people. Burger manufacturers have been worst hit with Irish and British demand down 25 per cent.

Goodbody expects the BSE crisis to reduce the incomes of cattle farmer's by about 10 per cent per annum. At the same time the incomes of dairy farmers incomes will fall by 5 per cent as a result of the cyclical downturn in dairy product prices, the brokers forecast.

Lower farm incomes have a knock on effect in the economy. Sales of farm inputs such as animal feeds and fertilisers will fall depressing the incomes of suppliers of these products. Goodbody expects sales of animal feed for cattle to fall by about 15 per cent and forecasts a 10 per cent drop in fertiliser sales. This would affect the sales of companies that supply farmers such as IAWS and Greencore.

The impact of the fall in demand for cattle fee will be offset by a somewhat stronger demand for pig feed demand for pigmeat and chicken grew sharply as the demand for beef fell. However, the controversy surrounding the levels of antibiotics in pork in the second half of the year may have a negative impact on demand for pork in the coming months.

Faced with a significant reduction in their incomes, farmers will start to defer capital investment projects. Spending on new buildings and farm machinery will be delayed. And with lower net income, direct spending by farming families in local areas is likely to fall.

Agriculture is Ireland's biggest indigenous industry, accounting for 6 per cent of GNP and 10.6 per cent of national employment. Net agricultural income is £2.252 billion after, deducting the cost of inputs and depreciation, according to Goodbody.

The brokers estimate that for every £100 lost or gained in the agricultural sector the total impact on the economy is a loss or gain of £250. EU supports are a major factor in Irish farm incomes. Goodbody estimates that EU funding accounts for 79 per cent to 99 per cent of net farm incomes.

It estimates annual transfers from Brussels to Ireland for agriculture at £1.7 billion to £2.2 billion equivalent to 4.6 per cent to 5.9 per cent of GNP. Direct farm income supports account for 32 per cent of net farm income.

The sharp fall in farm incomes both from the BSE crisis and the fall in dairy prices on world markets will reduce economic growth by 1.4 per cent, Goodbody forecasts.

The BSE crisis alone will result in a fall of 0.7 per cent in GNP and this could rise to 1 per cent unless cattle prices recover modestly in 1997.