Addressing the Beef Pricing Problem

The short answer to the problem of low farm gate prices is to get demand to outstrip supply.

The balance this year is particularly out of whack. Between April, when prices started to plummet, and August (latest published data), around 9% more cattle were slaughtered in Great Britain compared with the same time last year. Demand in the grocery trade over the same time grew by just 1%. So we cannot be surprised that prices have dropped.

The issue of oversupply might ease. According to the National Beef Association, dairy beef finishers will drop out of the market next year as profits suffer through low prices and high feed costs. Longer term, industry experts forecast that global demand for beef will outstrip supply.

Meanwhile, what can be done about demand.

There is no shortage of advice. We have heard the NBA call for supermarkets to follow America’s lead and be creative about developing high value cuts from the forequarter, and to stop selling mince at cheap prices because they cannot be bothered to think up other ways of selling meat from the front end.

Peter Allen, respected head of Midlands based catering butchers Aubrey Allen says the answer is to create a beef brand that will deliver guaranteed quality, and so command a higher price which can then be passed back along the chain.

John Cross, EBLEX chairman, reckons the answer is to export more, and that EBLEX is ideally placed to lead the charge across the channel and beyond. It’s true that exports are growing fast, up 20% this year, but at 56,000 tonnes compared with over 300,000 tonnes sold through supermarkets it will not solve the problem.

One thing is clear – raising the price of beef to consumers in the hope that some of the increase will be passed back to producers will merely dampen already fragile demand. We should be pleased that people are buying mince because at least that keeps them in the beef market rather than turn to cheaper pork or chicken.

What also needs to be recognised is that vague calls for “the industry” to grow demand will not work. Stimulating demand requires focus, funding, and clear accountability for performance.

Producers do not have this type of clout. Neither do industry bodies who can influence and campaign, but do not have the sales and profit responsibility that brings with it a hunger for results.

It is processors, who are best placed to drive demand and it is they who should shoulder the main responsibility for growing beef sales. A creative processor, who understands what consumers want, and has close relationships with the outlets they supply, should be able to develop products which build sales and profits for all in the supply chain.

Flashes of inspiration do exist, but mostly supermarket shelves and food service menus are filled with the same cuts that were available decades ago.

The role of the processor is rarely mentioned in the beef pricing debate. Processors need to come forward, raise their game and add some dynamism to a sluggish market.