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Scottish Beef Sector Suffering

14 April 2015
National Farmers Union, Scotland

SCOTLAND - Scottish beef producers are suffering severe pressure on price and experiencing marketing delays during the crucial spring months, for the second year in succession.

Wholesale prices for Scottish steers passing through abattoirs last week averaged just over 360p per kg – 20p per kg less than at the same time in 2014.

That means an average finished steer weighing 600 kilos is worth around £80 per head less when it enters the food chain compared to prices last spring.

The National Farmers’ Union of Scotland said that adding to the problem, many beef animals on Scottish farms are now ready for the market.

However, a combination of lower retail demand for beef and a weak euro making exports more difficult – and imports more attractive - means that beef cattle are backing up on Scottish farms waiting for slots to enter abattoirs.

NFU Scotland’s Livestock Committee Chairman, Charlie Adam, who keeps beef cows at Braeside near Alford in Aberdeenshire said: “Lower demand, falling prices and abattoir delays at this time of year appear to have become perennial problems for Scotland’s beef producers.

“While experts point to a tightening of supplies later in the year, the reality for many beef producers is that prices are now substantially lower than last year.

“While these may be offset by lower feed costs this season, the delays now being experienced in getting animals away to abattoirs when they are at their peak runs the risk of cattle no longer meeting the specification demanded by processors and the marketplace.

“That runs the risk of price penalties being imposed for stock being too heavy or too fat, and any margin is quickly eroded.

“Currency is also conspiring against us. The weak Euro has contributed to more difficult export conditions and greater pressure from imports – particularly from Ireland.

“Industry sources suggest that higher imports have had most impact on the market for manufacturing beef and mince that makes its way into the processed food and catering sectors.

“Given the producer price differential between the UK and Ireland and the considerable strengthening of sterling against the euro in recent months, figures provided by QMS suggest that beef imports to the UK from Ireland are up 10 per cent year-on-year at 14,750 tonnes.

“However, analysis of the retail sector suggests that this beef isn’t making its way on to shop shelves and that multiple retailers are actually selling less Irish beef than they did 12 months ago.

“This would then suggest that imported Irish beef has been going into the food manufacturing and foodservice sectors, potentially lowering demand for home produced beef and mince and feeding back into lower producer prices.

“Beef imports from other EU suppliers - Holland, Germany, Poland, Italy, Spain, Belgium, France and Denmark – are also up by 20 percent on the year to 4,100 tonnes and contributing to the pressure.

“While currency is beyond our control, we can do more to make our sector more robust given that lower demand and higher marketings – some of it led by the switch to spring calving - are likely to be a permanent fixture for the Scottish beef sector each spring.

“NFUS will continue to work with QMS through its Beef Marketing Strategy Group. We welcome its decision to adjust the timing of next year’s beef campaign to include Easter and believe it will help stimulate demand for Scotch during this holiday period.

“The Union will also continue to carry out spot checks in retailers to ensure that Scotch beef is clearly identifiable on the shelf, properly labelled and not co-mingled with beef from elsewhere. We will also look at labelling on imported beef and that, for processed beef products, the country of origin is clear.

“Forward planning between producers, processors and retailers can help all parties make sure we meet the needs of the market while securing a share of the margin for all.

“Given fair warning; clear signals and proper incentives for meeting specification, I am certain Scotland’s beef producers can adapt so that we can better supply the premium market for Scotch beef all year round.”

 

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