THE full scale effects of the BSE crisis will become apparent during the second half of the year, according to industry experts. At that stage there will be a sizeable number of cattle ready for slaughter. These animals may not find buyers because of the sharp decline in demand for beef.

Consumption is 30 per cent to 40 per cent down in Britain, France and Germany and several third country markets which the IFA says are worth £600 million a year remain closed to Irish beef and livestock exports. These include Libya, Iran, Turkey, Morocco and the United Arab Emirates.

Farming groups claim that beef farmers may lose £260 million this year, which economists say will lead to a 7 per cent fall in farm incomes. The Republic's beef and livestock industry is worth £1.7 billion, according to the IFA and involves 100,000 livestock farmers and up to 30,000 direct and indirect jobs.

Apart from farmers, the beef processing industry employs around 10,000 workers. Thousands more are engaged in related activities such as transport.

Britain's BSE crisis is also Ireland's beef crisis. Irish food companies control 30 per cent of Britain's beef processing. They also control 25 per cent of Britain's cheese marking and 18 per cent of its liquid milk business.

"All beef businesses in the UK are under pressure, no matter who owns them," says Joe Gill, food sector analyst with Riada Stockbrokers.

In addition, Irish companies export £200 million worth of beef to Britain each year, as part of the more than £12.4 billion worth of Irish food imported by Britain. This includes more than £250 million worth of dairy products. "The second half of the year will be very critical," says Mr Gill.

Mr Seamus Sheehy, Professor of Agriculture at University College Dublin, agrees. He says that Ireland was already up to its limit regarding what it could consume domestically and any decline in demand will create a large surplus.

He says if the crisis abated by next Christmas "it will be sore but it will be short". However, with a surplus of cattle in production, the problem is set to roll on for two or three years. "There is no easy way of getting it out of the pipeline," he says. "If milk was the problem you could cut the quota, but with beef there is no lever to pull."

Mr Sheehy says there has been talk on slaughtering big numbers of adult cattle, but the solution may be to slaughter large numbers of calves. He agrees it would be a fairly drastic solution.

Mr Sheehy says the beef industry accounts for around one third of total farm output. He says milk prices have slipped back a little, but not much, and there is a bit of a boom" in cereals.

Mr Gill says the CAP is protecting Ireland against the worst ravages of the disaster because it brings with it intervention and subsidies. Otherwise beef prices would be in freefall, he says. However, if Ireland can keep clear of Britain's BSE problems, we could find large markets opening up to us as beef consumption rises again, says Mr Gill.

All observers agree that the final compensation package agreed at EU level will have a major impact on the beef industry. At present £58 million is earmarked for Ireland, but Agriculture Minister Ivan Yates wants the figure increased substantially.

Mr Sheehy believes the Minister will probably get more money for Ireland and the losses at producer level will be offset to some degree by the compensation package.

Others question exactly how this money will be allocated. "It's hardly likely that the EU will let meat factories buy beef cheap in the autumn and let them sell it into intervention," says one economist.

The IFA has produced a comprehensive list of demands for helping farmers to overcome the crisis and to improve the image of beef abroad. Among its demands are that there should be full compensation for the losses incurred by winter beef producers and long term compensation for any production or price cuts because of the crisis.

It also says there should be a "ministerial and diplomatic offensive" to re- open Ireland's third country beef and livestock markets.

Re-opening trade with Iran is one of the most important issues for meat processors in the short term, says Ciaran Fitzgerald, director of IBEC's Irish Meat Industries association. He says Irish processors were in the middle of a contract with Iran when the BSE crisis erupted and everything is now in limbo. There is also stock in hand because the contract was suspended, he says.

Mr Fitzgerald says the market is very important and Iran takes 30,000-40,000 tonnes of beef per year, representing around £100 million.

It is calling for a £100 million EU generic beef promotion campaign across Europe and for "decisive EU action to ensure that adequate steps are taken to deal with the BSE problem in the UK".

Analysts agree that prices will be even weaker in the autumn and that the resumption in slaughtering will once more focus attention on the BSE crisis. They warn that if a definitive link is found between BSE and CJD, or a link between BSE in cows and calves is discovered, it will be absolutely catastrophic for an industry struggling to recover.