Beef farmers are being warned not to use a surge in prices as a signal to sell up and quit the sector. The National Beef Association says the move would be the equivalent to throwing away seed corn when there was a chance of a good harvest.

And, say officials, price movements which are already starting to reflect a short market should soon push prime cattle prices well above the levels needed for even an averagely efficient business to survive.

The association, now chaired by Exmoor farmer Christopher Thomas-Everard is worried that after years of struggle many breeders will take the latest surge in the value of cull cows as an opportunity to bail out.

If that happens says chief executive Kim Haywood, breeding females could soon be almost as scarce, and as expensive, as gold dust.

"Even though other parts of the UK economy are in recession, retail beef is at least 20 per cent more expensive than it was this time last year, she said.

"At the same time, tight prime cattle supplies are expected to continue to thin down dramatically as the year progresses.

"All of this points to average deadweight prices across the UK soon topping the important 300p a kilo mark and the average value of an unproductive cow should be significantly above 200p on the average recorded at the end of last summer."

The home market is also being affected by the fall in the value of sterling, which is making imported of Irish beef – stocked by most of the major retailers – more expensive.

The NBA says there are already signs of a looming shortage, with domestic production down by between 15 and 18 per cent and a further drop expected in the autumn as the supply of beef cross calves from the dairy herd falls as a result of the swing to Holstein inseminations in September 2006.

Ms Haywood said that only a handful of additional Holstein bull calves had been reared and their numbers were well short of making up for the missing British Blue and Limousin crosses.

"There is increasing agreement that from August onwards there will be a precipitous decline in domestic slaughterings – and competition for those prime cattle that are still available will be unusually fierce" she said.

M eanwhile, the association has hit out at the Food Standards Agency for arbitrarily imposing new slaughter rules on cattle aged between 30 and 48 months.

In a surprise move last week it ordered animals in that age bracket needed to be split and processed separately from both under 30-month-old cattle and cattle over 48-months-old as part of continuing precautions against BSE.

Ms Haywood said the regulation was unnecessary, impractical, and expensive.

"This has been imposed regulation on the industry without prior consultation and in complete contradiction to the FSA's promise to look for science-based solutions incurring the lowest possible cost when faced with food safety issues," she said.

"Many slaughterers do not have lairages big enough to physically separate three age batches without mixing animals from different farms and we are also struggling to see how separating cattle into three age batches in a lairage can help food safety.

"The FSA has imposed additional, and costly, regulation on the beef industry without any scientific justification whatsoever – and at a time when anti-BSE regulation should be relaxed in line with the steadily diminishing number of cases each year."