Plummeting beef prices in the UK scrutinised
At an Environment, Food and Rural Affairs Select Committee (EFRA) hearing, the long-term drop in prices was examined as well as the role of processors and retailers in the supply chain. Giving evidence to the committee were National Farmers Union vice president Stuart Roberts national director of the National Beef Association Chris Mallon, ABP Beef (UK) managing director Tom Kirwan and, British Meat Processors Association chief executive Nick Allen.
Citing data sourced from the Northern Ireland levy board, Roberts said that farmers are “at a point where the farm gate price for prime cattle has fallen way below the cost of production”.
“This is causing huge financial pressure for beef producers across the UK, who have so far lost £170m at the farm gate,” he explained.
Roberts also recounted the experience of one farmer seeing a drop of £180 per beast when it came to selling his animals. “Significant falls are happening that are having a real impact at a time when confidence is down for a variety of reasons.”
When questioned by the committee about falling farmgate prices, ABP’s Kirwan said 2019 has been an exceptionally difficult year for a variety of reasons. “We’ve had a decrease in demand from the UK consumer and 2% increase in production putting more meat on the market,” he said. “We had a substantial change in consumer behaviour in summer 2019, with AHDB estimating a 14-15% drop in demand, with many switching to fish. We’ve also had to content with serious bad press, with a job to do to reverse it.”
Mallon suggested that the situation wasn’t as dire as some were making it out to be but that farmers were still losing out. “Our [farmers] share was typically 50% but now it’s down to 46%. It’s the farmer that’s suffering.
“We’ve seen retail price fall back by 1% and our price back by 11%. There is money somewhere between us and the consumer and it’s disproportionate to the amount of time spent. For the 12 weeks to 11 August, primary beef sales were up almost 5% and combined beef up 0.5% so that goes against the figures that say there’s a decline. The situation in beef sales isn’t as bad as it’s being made out to be. If it was, we wouldn’t be killing them. There’s a lack of competition in our market and that means we do not have people fighting to get those cattle because our options are low. The main abattoirs are small in number and farmers have very little option on trade. No farmer feels they’re getting a fair share of the price.”
Kirwan defended the prices paid to the farmers to the committee, stating: “On average, processors have paid British farmers 27p per kilo more than the EU average. I don’t consider that a bad performance. Yes there has been some erosion but we’re working with our supply base and retailers to try and push that meat through the system.”
He also suggested that processors were fighting costs internally including on labour. “Very challenged on costs. In general terms, the pay for a slaughter-person or in the deboning hall is up to £600 per week. We've had to reduce slaughtering days due to being unable to get the product deboned because of staff shortage. It's become a grave situation, particularly as we come into the Christmas season.”
Despite no retail presence at the hearing, Roberts added that there is a lack of transparency in the industry in other areas. “Transparency in this supply chain is critical. We need to shine a light on some of the other areas such as food service, public procurement, by-products and disposal costs.”
He also urged the industry to work together more to create a “more positive” narrative.
“It is vital we do more on promotion to the consumer. The levy bodies and others in the supply chain haven’t done enough.
“We need to learn the lessons of what others are doing,” added Roberts. “What protein alternatives are doing is presenting a seductive narrative despite us having a better one. We've got to learn from their positives - they are presenting the consumer with an attractive product while we're not seeing enough innovation or attractive cuts in packs in the meat industry. We have got to get the same appetite and enthusiasm into getting meat products onto shelves, and not be lazy by presenting the consumer with the same products they've always had.
“We also need to deliver effective campaigns to promote quality British beef. Over the summer I urged processors to consider matching industry investment pound for pound. I now put this to government to help the industry write its own narrative and work towards driving demand at home and increasing our markets abroad.”