Carcase balance issue to come for producers
BMPA chief executive Nick Allen explained that while there seems like a surge in demand for meat, most of the retailers have narrowed their range to a small variety of cuts during the coronavirus situation, with a focus on mince leading to a big build-up of other cuts like steak and hind quarter, which processors can’t sell on.
“Short term, some food processors (but not the ones who exclusively supply the food service industry) have seen an increase in turnover, however it’s only for certain products, particularly minced beef, and it’s causing a problem,” he said.
BMPA also highlighted a build-up of meat that was destined for the food service sector but that now isn’t in a format that retailers are willing to buy because it’s not packaged and labelled for the retail market.
“The problem is ‘carcase balance’,” said Allen. “The portion of an animal that is sold as mince is typically not very profitable but is balanced out by selling more expensive cuts of meat. Even if it is frozen, or retailers buy these other cuts to sell on promotion, it will be at a lower price that makes it unprofitable to continue processing, unless, that is, the price of livestock is reduced.
“In this scenario, the problem will end up at the farm gate, with farmers struggling to sell their animals at a price that covers their costs.”
Allen added: “BMPA is calling on retailers to follow the example of some retailers who are closer to the carcase balance issues and work with us to help guide shoppers to not panic-buy and instead return to a more normal pattern of food purchasing.
“There is plenty food to go around but, in order for the system to keep working, we need to maintain the mechanisms (like carcase balance) that allow it to function properly. If we don’t, then this time next month, we’ll be calling on Government to intervene to fix a much more structural problem amongst farmers, livestock auctions and meat processing companies.”
Allen also explained to GlobalMeatNews that while some of these portions would have been exported, the fact that most of the UK’s main export markets are in the same position in terms of food service outlets being closed, there’s no overseas demand for them.
A similar issue was reported by Danish Crown Beef. CEO Finn Klostermann said: "In terms of production, things are actually going really well. We have been spared from extensive illness, so on that side we do not see challenges. On the sales side, it is also good to sell a large part of both the beef and veal we have available, but sales of the noble cuts and hides for leather are limping sharply.
"The sale of sirloin, beef fillets, ribs and culottes is affected by the fact that hotels, restaurants, conference centers, assembly houses, banqueting rooms and cultural events are deserted. Confirmations, weddings, seminars, round birthdays and now the Easter lunch have been canceled or postponed indefinitely, so although many consumers spend the extra time at home to cook well, the same quantities are not sold as usual."
Meanwhile, the turnover of hides for leather has almost stopped because the power center in that industry is located in Northern Italy.
"It's a damn bad situation, because overall there is no panic in any way, but the market for hides and noble cuts is just hit to a degree that the good sales of minced meat and small meat for gold ash cannot compensate," added Klostermann