Cattle Farm Gate Prices Up But Beef Consumption Down

Whilst beef farmers breathe a sigh of relief that farmgate prices for cattle have improved, there is a cloud on the horizon in the shape of falling beef eating.

In the 12 weeks prior to Christmas the amount of beef bought from shops plunged by 9 %. And it is not really surprising. Over the same period the average price of a kilo of beef went up from £5.99p a kilo to £6.58p, reflecting the increased prices that retailers and processors have been paying producers. (Source Kantar Worldpanel)

The drop was even more dramatic in the 4 weeks immediately before Xmas when sales were down 13%.

We have seen this picture already on lamb which saw even steeper farm gate and consequent retail price increases. Last year lamb consumption plummeted by 20%, and this was on top of a decrease in the previous year.

It is, though, a rare cloud that does not have a silver lining and the beneficiaries have been fresh pork (up 2% last year),bacon (up 4%), and sausages (up2%).

Consumers seem to have replaced much of their red meat eating with alternative protein sources. Chicken sales continue to grow and there was much anecdotal evidence of a major switch to turkey pre Xmas.

Of course domestic consumption is by no means the only contributor to farmgate prices. The size of the UK breeding flock has an impact as do the euro and imports.

These factors can change, as the euro performance just now shows, so, regardless of external factors, British farming needs a healthy domestic market.  The drop in beef and lamb eating reminds us that meat is price sensitive.To this end we should perhaps not chastise retailers for encouraging consumers to keep buying lamb, beef and pork, even if this does mean some price promotion.