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Red Meat Processors’ Viability Threatened By Beef Price ‘Pincer Effect’

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Red Meat Processors’ Viability Threatened By Beef Price ‘Pincer Effect’

October 21
20:07 2013
Scotch Beef landscape.jpg

Quality Meat Scotland (QMS) is warning of a serious disparity between the retail price of beef and the genuine cost of beef production and processing.

Speaking at the launch of QMS’s annual review, chairman Jim McLaren said the problem now posed a very real threat to the future viability of the red meat processing sector:

The beef processing industry is facing major financial pressure and struggling to endure the pincer effect of strong cattle prices and the time-lag in retailers passing this raw material price increase to consumers,’ he said.

‘The result is our processing sector is enduring margins which are simply unsustainable.’

The latest analysis by QMS looks at beef market trends over the past three years. The average deadweight price – the price paid by an abattoir operator to a farmer – paid since July 2010 for a steer in GB has risen by 51 percent, from around £2.65/kg to just over £4.00/kg.

However, retail price index data from the Office for National Statistics shows that, in June 2013, the average retail price for beef in the UK was just 22% higher than in July 2010.

Mr McLaren and QMS Chief Executive ’Uel Morton have recently met with processors from businesses throughout Scotland. Each of these processors, along with those in other parts of the UK, has voiced grave concerns about the situation which has emerged.

‘If we look at how prices have moved for cattle and beef over a 20 year period it is very clear that the retail price of beef has lagged behind most other meats and proteins and, until recently, all other foods,’ added Mr McLaren.

‘Without question, there is a very real opportunity for retailers to address this disparity and move towards a more realistic beef price on the retail shelf and, in turn, an increased return for processors.

‘Such a move would be a welcome indication of retailers’ recognition of the spiralling costs faced by processors who have also seen a significant increase in labour, energy and distribution costs.’

Mr Morton observed that changes in consumer purchasing habits since the horsemeat fraud may also offer an opportunity for retailers to increase prices to more closely reflect higher raw material costs:

‘Retailers have reacted to increased demand for product provenance and shorter supply chains by committing to source more of their fresh beef offering from UK suppliers,’Mr Morton said.

‘This means that UK retail prices are likely be less responsive to the global market and consumers have a better understanding of the need to pay a little more to purchase quality assured beef of known provenance.

‘The door is open for retail prices to increase as a reflection of the dynamics of a changed supply situation.’

Such an increase would send a much-needed positive signal of confidence to Scotch Beef processors, Mr Morton said, allowing them to commit to long-term investment in their businesses which operate at a high standard to meet stringent quality assurance, traceability and welfare standards.

Producers who are members of the industry’s quality assurance schemes will receive copies of the QMS Annual Review 2013 this month. The document is also available to download at qmscotland.co.uk, or copies can be requested free of charge by calling 0131 472 4040.

 

 

 

 

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An ‘alarming’ gap is emerging between the true value of beef and the price at which it is being sold on retailers’ shelves, warns meat marketing body…

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