Business Blog

19 April 2013 Last updated at 19:35 ET

George Osborne's flagship scheme to boost the housing market may not help first-time buyers and could cost the Treasury large sums, MPs have warned.

The government will guarantee mortgages for three years from January where applicants can put down a 5% deposit.

The Treasury Committee warned the chancellor's plan made the government an "active player" in the market with a financial stake in propping up prices.

Labour say the plan amounts to a "spare home subsidy" to existing home owners.

Ministers aim to extend the current Help to Buy scheme to make it easier for first-time buyers or those looking to trade up to get access to home loans if they do not possess substantial equity of their own.

'Curtailing risk'

Mr Osborne has said the housing market is still not functioning properly after the 2008 financial crisis, with the number of purchases by first-time buyers down 40% in the past five years.

He has claimed the plan, now the subject of consultation, could unlock £130m of mortgage finance.

The idea is that loans from High Street lenders for house purchases of up to £600,000 would be underwritten by the government.

If a borrower defaults on a mortgage, he or she would stand to lose their 5% deposit. Thereafter the government would have to pay just under 15% of the outstanding amount, while the lender would be liable for just over 80%.

House builders and lenders have welcomed the initiative but Labour have warned of confusion about whether it could be used to buy second homes.

But, in an analysis of the main measures in March's Budget, the cross-party Treasury Committee identifies what it says are a number of potential problems.

The committee says it is not clear what fee lenders will have to pay to take part in the scheme or how it will be structured to cover potential losses.

The MPs also warn that the Treasury will find it difficult to price the scheme in a way which "sharply curtails risk" to the taxpayer.

The Treasury could potentially face big losses on loans it has guaranteed if lenders start to act more aggressively and the number of repossessions rise.

'Damning'

The committee says it is "by no means clear" that the scheme will benefit first-time buyers.

And the chancellor's claims that boosting demand will, in time, serve to increase the supply of property were "unconvincing" in the short term.

The committee also expresses concern that the scheme could become a "permanent feature" of the housing market and insists any decision about its future should be taken by politicians rather than the Bank of England.

And it says there is a "lack of clarity" about whether people who already own a home would be excluded, arguing that it "struggles to see the rationale" of existing homeowners of any kind being able to benefit from it.

"The government's Help to Buy scheme is very much a work in progress," said the committee's chairman, Tory MP Andrew Tyrie.

"It may have a number of unintended consequences. The questions the committee has asked the government need answering."

Budget leaks

Labour said the "damning" report was "another damaging blow" to George Osborne.

"We will only tackle the housing crisis and help first time buyers if we have a major programme of affordable house building, which Labour called for as part of our jobs and growth plan but the Budget totally failed to deliver," said shadow Treasury minister Cathy Jamieson.

"And it's astonishing that one month since the Budget, George Osborne has still failed to rule out people being able to buy second homes with a taxpayer guarantee.

"First time buyers and people struggling to get a mortgage should be the priority for help, not a spare home subsidy for the small number who can afford to buy a second one."

The Treasury says this is not the point of the scheme but parents may be allowed to buy homes for their children when it is finalised.

In its report, the committee also urged the Treasury to take further action to prevent Budget leaks.

It has called for an end to the practice of officials pre-briefing sections of the media about what is in the Budget on the understanding that it is not published until the statement has been delivered.

This comes after Evening Standard accidentally published details of the key points of the Budget on Twitter before Mr Osborne had addressed Parliament.

19 April 2013 Last updated at 16:57 ET

The Fitch credit ratings agency has downgraded the UK to AA+ owing to a weakened economic outlook.

The move, after Moody's downgrade in February, came as Chancellor George Osborne defended the government's austerity plan.

Fitch said its downgrade primarily reflected a weaker economic and fiscal outlook.

Mr Osborne has said his was the "right plan" and that the economy was "healing".

Fitch said its downgrade "primarily reflects a weaker economic and fiscal outlook" but returned its outlook to "stable", removing the threat of further rate action in the near term.

Ed Balls, Labour's shadow chancellor, said: "This is another humiliating blow to a prime minister and chancellor who said keeping our AAA rating was the number one test of their economic and political credibility.

"And it ends a disastrous week for George Osborne's economic policy after the IMF downgraded its UK economic forecasts again and warned Britain needs a plan B for jobs and growth," he said, referring to a report issued by the International Monetary Fund earlier this week.

In its twice-yearly World Economic Outlook published on Wednesday, the IMF slashed its forecast for growth to 0.7% in 2013 after saying in January that the country's economy could expect 1% growth.

'Stark reminder'

Moody's became the first major agency to downgrade the UK's sovereign debt rating in February, although Standard & Poor's reaffirmed its AAA rating earlier this month.

Regarding the latest downgrade from Fitch, the Treasury said: "This is a stark reminder that the UK cannot simply run away from its problems, or refuse to deal with a legacy of debt built up over a decade.

"Fitch themselves say the government's 'continued policy commitment to reducing the underlying budget deficit' is one of the main reasons UK debt now has a 'stable' outlook.

"Though it is taking time, we are fixing this country's economic problems. The deficit is down by a third (since 2010), a million and a quarter new private sector jobs have been created and the credibility we have earned means households and businesses are benefitting from near record low interest rates."

Time to consider?

IMF delegates visit the UK next month for annual consultations that allow it to monitor member countries and issue recommendations about economic policy.

Some IMF officials have recently raised doubts over Mr Osborne's strategy.

Managing director Christine Lagarde told the BBC's HardTalk programme: "With this medium-term strong anchoring of fiscal consolidation, the pace has to be adjusted depending on the circumstances and given the weak growth that we have observed lately because of reduced demand addressed to the economy, now might be the time to consider.

"But we want to have the dialogue. I don't think it's fair on any of our members... to actually pass a final judgement, and the words used matter and the grammar that is applied to words matters so when we say 'may consider', we are opening the door.

"But now is the dialogue," she said, referring to the IMF's upcoming visit to the UK.

Her comments were in line with those made by IMF chief economist Olivier Blanchard earlier in the week, when he warned that Mr Osborne was "playing with fire" if he continued his current strategy.

But the chancellor is sticking to his plan, saying he would defend his case when the IMF officials visit.

"Britain's got the right plan in terms of dealing with its deficit," Mr Osborne told the BBC, speaking before Fitch published its report.

"We've got a plan that gives us credibility in the world and enables us to borrow at very low interest rates.

"It's also a plan that has demonstrated flexibility, so as we've had problems, for example in the eurozone, we've been able to adjust to the impact of that.

"I think that the British economy is healing, and confronting the problems built up over many years."

16 April 2013 Last updated at 19:09 ET By Catherine Wynne Business reporter, BBC News

Sales of bikes in the UK are up. But not everyone is content with buying a mass-produced bicycle. Some are looking for something different, which is helping the revival of a traditional British craft.

Peter Bird likens himself to a tailor. At his workshop at Ironbridge Gorge in Shropshire he takes his clients' inside-leg measurements and finds out their exact needs.

But the tools of his trade are not a needle and thread, they are a brazing torch and steel tubes. His creations are not bespoke suits, but bespoke bicycles.

"One of the main reasons many people don't ride much is because their bicycles don't fit them very well. Our job is to get the fit right," says Mr Bird, who has been building bikes under his Swallow brand for 30 years.

"We make it comfortable, make it light and then add this whole thing about what it looks like. So you end up with something that is totally unique and is a joy to ride."

Mr Bird is one of the exhibitors at a show in Bristol devoted to independent bike builders, Bespoked. "This is a jewellery show for bicycles," the former goldsmith says, "a place to see gorgeous product, and where no mass manufacturer is allowed."

Now in its third year, the event's success represents the resurgence of interest in handmade bikes in the UK.

"We've been waiting for this kind of momentum for 30 years," Mr Bird says, smiling, as he looks at the bike fans filling the hall.

Anna Collins, a climate campaigner from London, is here looking for her dream bike. But it will be far from an impulse buy.

"I think I will spend more time planning a bike than I would a wedding dress," she says, laughing.

"When you get a bike that fits, there is nothing better. It is like having a custom pair of trousers or a custom dress," she says. "The other thing is beauty. It is like having a work of art, too."

Waiting list

At one time, every town in the country had at least one frame builder, but the craft largely disappeared over the past couple of decades as cheap, mass produced bikes were imported from Asia.

It is now being revived in workshops, sheds and garages dotted across the country partly thanks to a new generation of young makers like Tom Donhou.

There is a year-long waiting list for the bikes he constructs at his workshop in Hackney Wick, a former industrial area of East London which has been colonised by young artists and craftspeople.

Tom, a former product designer, allows two weeks for each one.

He starts by building and painting the all-important frame, whose geometry determines that the seat, handlebars and pedals are in the correct position for each cyclist and the sort of riding they do. He then adds on the customer's chosen components - such as gears, brakes and chainset - which complete the bicycle.

"For me, the reason to buy a made-to-measure bike is you know where your money is going. You are supporting an independent person who loves what they do," he says.

"Aside from the fact that it is tailor-made to fit you exactly, it is about the ethics of the whole thing. It is built in the UK. It has not been outsourced to China or the Far East."

Built to last

The revival of bespoke bicycles in the past couple of years has come hand-in-hand with some very straitened economic times. And with so much work going into each bike, they don't come cheap.

Prices typically start at £2,500 for a full bike, way above the few hundred pounds regular cyclists spend on average. In extreme cases this can climb to £10,000 with the inclusion of some very high-spec components.

Far from hitting sales, the downturn may even have played a part in the industry's success, says Phil Taylor, organiser of Bespoked.

"People in a recession tend to buy wiser and invest their money in something that will last longer. If you have a bicycle that is especially made for you, you are investing in something that will last you forever."

No one is saying that this will ever be more than a niche sector. Many workshops produce only a few dozen bikes a year. Some even fewer.

And the vast majority of bikes sold in the UK are made overseas and sold through a handful of national chains such as Halfords to customers content to buy standard-sized frames.

Mr Taylor is hopeful that the recent success will continue as people recognise the quality of what is being made. But he has a warning, too, for the growing numbers wanting to learn the craft.

"It takes a long time and it is hard work," says Phil Taylor, himself a bike builder. "No-one in there selling bikes is rich."

Tough times

One experienced bike builder, who does not want to be named, says you have to be driven by passion, not money: "It has been bloody hard and I have never really made much money."

He is sad that even as a skilled craftsman, in all his years in the industry he has never been able to earn the average UK yearly wage of about £25,000.

"We are involved in an industry where people assume you earn good money because you are dealing with expensive bikes," he says.

"But most of the expense is the bits you buy to build them. If you work out the profit on things, it is not that great."

The four friends involved in the new Sheffield-based Field Cycles, are all having to do other paid jobs too.

"If you make things by hand, one by one, you are never going to be rich," says Harry Harrison, who is juggling building bikes with teaching fine art at Sheffield Hallam University. "I would probably make more money stacking shelves at Tesco."

Each of Field's steel-framed bicycles is marked Handmade in Sheffield, something that has already attracted overseas buyers from Germany and Japan.

The city's industrial heritage is something of which Harry is proud to be a part. The plan is to both continue the tradition of making desirable products in steel - and make a living from it.

"I might be naive, but I think that if you make a really good object and you really try to take care of the people who are buying it off you, then I think there is a way to make it work."

17 April 2013 Last updated at 20:04 ET By Luis Barrucho BBC Brasil

The city of Sao Paulo has a large Italian population and is proud of its Italian restaurants. So it came as a shock when some of them announced that any dish with a tomato base would be dropped from the menu.

This startling change to such a traditional offering came after tomato prices soared over the past 12 months in Brazil, at one point recording an increase of around 150%, according to the IBGE, Brazil's statistics agency.

And the impact went far beyond restaurant tables as pressure grew on the government to curb rising inflation, an issue that is deeply sensitive in South America's largest country.

No-one is saying there has been a return to the bad old days of 1990's hyper-inflation when at one point the rate topped more than 2,000%. But at the weekend, increasing prices were again front page news in some of Brazil's leading magazines.

In one, the foot of Brazil's President Dilma Rousseff was portrayed as squashing - what else, but a tomato.

Under pressure

Sao Paulo's famous Nello's restaurant was the first to grab headlines with the decision to drop tomatoes from the menu, a move announced on its Facebook page.

"We did this to raise people's awareness," manager Augusto Mello told the BBC.

"We've always paid around two reais (66p/$1) per kilo of fresh tomatoes. But prices have recently soared, and we were paying seven reais per kilo, which is too much, especially for a restaurant like ours, that needs to buy one tonne every month,"

The rise can be explained by a combination of factors, analysts say.

"Tomato prices are rising because of heavy rains, high fuel prices, superheated demand and, mostly important, a reduction in the area used for plantation," says Leonardo Machado, an analyst at the Federation of Agriculture and Livestock, in the mid-western state of Goias, a region which is the country's biggest producer of tomatoes.

Cutting back

Food is where many Brazilian consumers are feeling the pressure most - making it a politically sensitive issue as well.

"I've already cut tomatoes out of my vegetable-based diet, because I can't afford prices like these," says Mariliza Leitao, a retired music teacher.

There have also been reports of people smuggling tomatoes from neighbouring countries, such as Argentina and Paraguay, where the staple costs less.

But, apart from seasonal factors, experts say it reflects that the rate of inflation is edging up in Brazil. In March, the rate, which when measured over a 12-month period, increased to 6.59%.

While lower than that of some emerging economies, it is still above the government's target of around 4.5%.

"Prices are high because of many reasons. On one side, there has been an increase in people's wages and the unemployment rate is at a record low," explains Alessandra Ribeiro, an economist at Tendencias, a private consultancy based in Sao Paulo.

"Brazil's Central Bank has also been reducing interest rates, which stimulates consumption. On the other side, production and investments fell.

"As a result, there's an imbalance between supply and demand, which tends to force prices up," she adds.

On Wednesday, the central bank decided to raise interest rates to try to bring rising prices under control.

It raised them to 7.5% from the record low of 7.25%. A decade ago, Brazil's rates were amongst the highest in the world, reaching 23.5% in 2003.

Tomato jokes

Although analysts expect inflation to moderate this year, rising prices pose a challenge for President Rousseff, a popular leader whose focus is on boosting her country's recent sluggish growth

"The rise in inflation has triggered alarm inside the government as Rousseff's voters are very sensitive to employment and price," says Ricardo Ismael, Professor of Political Science at the Catholic University of Rio de Janeiro.

"Any change could compromise her chances of re-election next year".

But in her fight against tomato prices, Ms Rousseff is not alone. She has been backed by her predecessor Luiz Inacio Lula da Silva, who remains very popular among millions of Brazil's poorest citizens.

"A very experienced woman like Dilma won't allow a little tomato to break an economy and a country whose people have learned to live with controlled inflation," Lula declared during a recent event of the ruling Workers' Party.

And it seems that many Brazilians have responded with humour to the rise in tomato prices. Facebook pages have popped up for Brazilians to vent their feelings about what has become a luxury item for many.

On one page called Tomate caro or Expensive Tomato, cartoons and photo montages poke fun at the fruit.

"I don't want to be rich, just to raise a tomato plantation", reads one caption.

It is a joke which the government must hope, like the tomato itself, will have a short shelf life.

18 April 2013 Last updated at 17:16 ET By Shanaz Musafer Business reporter, BBC News, New York

Following some goofy and exuberant public presentations, Microsoft's chief executive Steve Ballmer is certainly a larger than life character.

But with Microsoft having had to play catch up to the rise of smartphones and tablets, some critics have called for Mr Ballmer to resign and let somebody else take the company forward.

A lacklustre reaction to its latest operating system Windows 8, which was much-hyped but failed to impress, has also turned the spotlight on the chief.

Former Microsoft executive Joachim Kempin believes Mr Ballmer, who has been in the top job since 2000, should either leave the group altogether or at least move to a different role.

He told the BBC that Mr Ballmer's assertion that Microsoft is now a device and service company is "baloney", and that Microsoft is and always has been a software company.

'Totally wrong'

Mr Kempin worked for Microsoft from 1983 to 2002, and by the end of that time was in charge of selling Windows and Office to PC manufacturers.

"When I look at the situation today it is obvious Microsoft is abandoning these people [PC makers]," he says. "Microsoft are going into surface tablets. These tablets are OK products, but nothing really distinguishes them either."

By making this move, the company has alienated some of its manufacturing partners, he says, pointing to the likes of Hewlett-Packard and Samsung now producing Android tablets, not Windows tablets.

He says the company has also missed a trick with its Office software suite, by not putting it on Android devices and a smaller version on iPhones and Android phones. Instead Mr Kempin says they are protecting the Windows franchise, which is "totally wrong".

And the buck stops with the chief executive, he says. "Mr Ballmer is a great COO (chief operating officer) but he doesn't have that vision. A CEO needs to look at the total market."

He added that Mr Ballmer's style of management was very "prescriptive" and that the company had lost much of its entrepreneurial spirit.

Strong balance sheet

Microsoft pointed to its strong financial performance since Mr Ballmer became chief executive.

Revenues have nearly tripled from $25.3bn (£16.6bn) in 2001 to $74.3bn in 2012, and operating income has risen from $11.7bn to $25.3bn.

It also said that over the past decade, Mr Ballmer had returned more than $180bn to shareholders via dividends and stock buybacks, more than than any US company besides Exxon, and the $63bn cash it has on its balance sheet is second only to Apple in the US.

However, Microsoft's share price has been pretty stagnant over the past decade, generally trading between $20 and $30. By comparison, Apple's has soared from around $9 to about $700 in September 2012, though it has since fallen back to about $400.

It should be pointed out that Mr Kempin only worked under Mr Ballmer's leadership for a year or two, more than a decade ago, and that he left the company under somewhat of a cloud after deals he signed with PC makers were used as ammunition by the US government's anti-competition investigators.

He has now written a book called Resolve and Fortitude: Microsoft's "Secret Power Broker", which details his 20 years at Microsoft.

He may well have an axe to grind as well as a book to sell, but he is not the first person to call for Mr Ballmer to be replaced.

In May 2011 David Einhorn, president of the hedge fund Greenlight Capital - an institutional investor in Microsoft - said Mr Ballmer should step down as chief executive after IBM and Apple had surpassed Microsoft in terms of market value.

It was time to "give someone else a chance", Mr Einhorn said, though Greenlight has since increased its holding in Microsoft to a $289bn stake suggesting it still has faith in the stock, whatever Mr Einhorn's feelings on Mr Ballmer.

And at Microsoft's last shareholder meeting in the autumn, Mr Ballmer received approval from over 96% of investors.

Windows 8 impact

While Microsoft's revenues rose in the most recent quarter, 75% of its overall revenues comes from elements that are not pinned to the operating system.

However, there is no getting away from the fact that Windows 8, which launched at the end of October, has not impressed the market. Revenues from Windows in the January-to-March quarter were flat when adjusted for upgrade offers.

Last week, research firm IDC said global PC sales fell 14% in the first three months of the year, adding that not only had Windows 8 not provided a positive boost to the PC market, but appeared to have slowed the market.

"Windows 8 was not able to overcome the sexiness of new tablets and new phones," Patrick Moorhead, technology analyst at Moor Insights & Strategy, told the BBC.

"Microsoft took some gambles which didn't end up working out for them - [like] the pervasiveness of touch. All their advertising was about touch, touch, touch.

"Windows 8 was underwhelming as it was received by the market."

Microsoft's chief financial officer (CFO) Peter Klein, whom it has just been announced will leave the company at the end of June, has previously defended the transition to the new operating system.

"It's early days and an ambitious endeavour like this takes time," he said in January. "Together with our partners, we remain focused on fully delivering the promise of Windows 8."

'Give him credit'

Colin Gillis, technology analyst at BGC Partners, believes Mr Ballmer has had a lot of successes that aren't always credited to him.

"Kinect at the time was the fastest-selling consumer electronics device in history, XBox was also fast selling," he says. "And that was a very competitive marketplace.

"He's built up a multi-billion-dollar enterprise business, but the flipside is the computing landscape has shifted and Microsoft has not shifted well with it - this is the rise of smartphones and tablets.

"A lot of it is down to the leadership. It's fair to critique him in that area. But if you're going to penalise him in the areas where he's late to market you also need to give him credit for areas where he was successful."

Mr Moorhead agrees, saying that financially Microsoft is doing well through acquisitions and growth in their enterprise businesses.

"I think the bad opinions of Microsoft are harsher than the reality. [But] Microsoft and Ballmer are going to be measured in the eye of the public by how well did they do in phones and how does their trajectory looks in tablets, which right now is nowhere."

Outsider?

In a recent interview, Microsoft chairman Bill Gates was asked if he was happy with the performance of the firm under Mr Ballmer's rule.

Continue reading the main story

He replied: "There are a lot of amazing things that Steve's leadership got done at the company over the last year - Windows 8 is key to the future, the surface computer, Bing, people are seeing as a better search product, the XBox.

"But is it enough? No. He and I are not satisfied, in terms of breakthrough things, that we're doing everything possible."

So should Mr Ballmer remain in charge? While Mr Kempin firmly believes he should hand over the reins, Mr Moorhead says there is no imminent need.

However, he adds: "I think if you see multiple quarters of PC declines I don't see that Ballmer would be able to stay in power."

But it would be hard to pick a replacement, he says, given that so many top people have left the company.

CFO Peter Klein's departure follows that of Steven Sinofsky, the head of Microsoft's Windows division.

Mr Sinofksy could have been in line had Windows 8 been a success, but he left the group just a week after the Windows 8 launch, amid talk of an internal "war" between himself and Mr Ballmer.

If and when the time comes though, Mr Moorhead believes the company could bring in somebody from the outside.

"I think that it would be a good thing for Microsoft in that it would bring some new ideas, a new type of fire."

17 April 2013 Last updated at 19:03 ET By Danielle Codd Business reporter, BBC News

What do you do if you want to try your luck on a more unusual investment? Fine wine, fine art - or how about fine breeds?

Lying on a bed of freshly plumped golden hay, with a trough containing the best animal feed money can buy, Vexour Garth must be thinking he's hit the big time.

At just two years old Garth perhaps has good reason to feel rather pleased with himself.

He holds the title of the most expensive Charolais bull on the planet.

A private American firm paid £105,000 for the 1,000-kilo bull at auction last autumn.

"Economics is at the back of it, there's no denying it," enthuses Ray Firminger, the farmer who reared Garth at a farm in Kent, in south-east England.

"They haven't bought him just for his looks. They bought him for his resale price, if you like to think of him as a commodity. His resale value is very high."

At auction houses around the globe investors are showing an increased appetite for buying pedigree cattle and sheep at premium prices - and world records have been tumbling.

Last year, a Texel ram went for £231,000, while at the Blackface Ram sale at Dalmally Auction Mart a lamb sold for £9,000, equalling the breed record.

Million pound earner

So why all the fuss? Investors are pinning their hopes on the animals being top sires, producing large cows and sheep with high quality lean meat, or able to produce large yields of milk.

At an auction house in Lancaster, trade is brisk. A herd of Belgium Blues is being showcased in the ring under the watchful eye of Philip Halhead, chairman of the British Cattle Breeders Club.

"I imagine the American investors who bought Vexour Garth are looking to sell his straws of semen for between £50 and £100 per straw," says Mr Halhead, reflecting on Garth's record-breaking sale.

"To put that in context, every 10 days to a fortnight in the bull-stud Garth should produce 500-1000 straws of saleable product. So do the maths.

"It's not always that every bull produces high quality semen. That's still the gamble they've got to play with. But if it pays off, they will see a massive return on their investment."

Lucky break

Garth's previous owners, Sarah and Jan Boomaars, followed in the Boomaars' family farming tradition when they decided to buy, rear and sell the record-breaking bull with the help of farmer Ray Firminger.

"The Charolais breed was our first choice when we bought our farm in 2003 because there was good demand for Charolais bulls and we could see a long-term future in the stock," says Sarah Boomaars.

With a career in finance, Jan could see the potential for rearing pedigree cattle for sale in the UK, or exporting bull semen all over the world.

"We got lucky with Garth, but you never know how the demand for a certain breed will go down with buyers. It can depend on all sorts of things, particularly how flush people in the industry are feeling at the time," says Mrs Boomaars.

"While there are many rewarding high points, there are certainly times when it feels more stressful than working in the City," she says.

Saving money

Rising demand for red meat from emerging economies such as Brazil and China is one of the factors driving the prices for pedigree cattle, not just in the UK but also in the United States.

"The economy has driven the price of commodities up in the last five years, including the price of elite cattle," says Joe Epperly from the North American Limousin Foundation, which monitors sales of the highly-muscled Limousin breed.

"Along with that, the US has seen a resurgence in beef exports. This has yielded some of the highest prices for cattle in history, especially cattle with the top genetic potential."

With rising global wheat and feed prices, farmers are also increasingly faced with the dilemma of how to produce more food from fewer resources. For many, looking at their breeding stock could provide the answer.

"Using the highest performance rams and bulls is a sure-fire way to speed up on-farm improvement," says Philip Halhead.

It costs as much to feed a lower quality animal as a higher quality one, and Mr Halhead says farmers are trying to get value for money: "Using less wheat to produce a kilo of meat is something the pig and poultry industry fine-tuned years ago. Now it's the turn of the livestock industry,"

No dead certs

So how can people who do not have a farm or live anywhere near the countryside beef up their own investment portfolio?

Doug Parke of DP Sales Management in Kentucky has been brokering deals for the past 30 years with people who want to invest or buy a stake in the pedigree Simmental breed of cattle.

"The outside investors have often been from the construction industry or from banking. They've invested money because I think they've been intrigued about the cattle business and the opportunity to get involved in genetics," recalls Mr Parke.

Of course, investing in pedigree cattle does not come without its risks. There is always a chance that your investment could be stolen or even die unexpectedly. Farming is notorious for its unpleasant surprises.

It is also important to make sure that you do not hand over your hard-earned cash without doing some thorough research.

"Reputation is the number one thing. Research the pedigree livestock you want to get involved in. Talk to some of the main successful breeders within that breed and get as much advice from cattle associations as possible," cautions Mr Parke.

Even with those precautions, as with any alternative investment, you can lose all your money with no chance of compensation.

At his home in the south of England, Vexour Garth is taking it easy. "He's waited on hand and foot now," says farmer Ray Firminger.

"His bedding is kept clean, he's on the best food and monitored all the time. If he coughs or sneezes the vet comes in and checks him out to make sure he's ok.

"If you're a top-end bull like that you're treated like a king."