18 May 2010

3 minute read

Europe

The value of finished prime cattle has plunged by a damaging 12p per kg dead weight since the end of April and by 17p since Britain’s commercial R4L steers and heifers peaked at 290p in mid-January.

The National Beef Association is worried prices could fall further still, plunging even more feeders into loss, unless retailers revise beef prices in line with production costs and also offer consumers a wider choice of cuts and joints.

“Mince, which is the cheapest form of beef on offer, not only accounts for 49 per cent of retail sales it is also being sold at give-away prices that comprehensively undermine the position of beef as a high cost, high quality, product that is more than capable of earning much more money for retailers than it does at present,” explained NBA director, Kim Haywood.

“Selling it at current volumes, and at current prices, is suicide for the beef industry because it cannot survive if almost half the carcase, much of it beef that could otherwise be sold for higher prices, is chucked into the grinder because retailers want to make sure they do not lose customers to another store where mince is even cheaper.”

The NBA is adamant that offering huge tonnages of minced beef as a retail lure, which pitches it at almost the same bargain level as five week old broiler chicken, will be the death knell of an industry that has a two and a half year production cycle and all the cost that goes with it.

“It makes you weep to think that instead of dumping so much mince as a loss-leader, more beef could so easily be sold for more money, earning substantially more income that could then be re-distributed to retailer, processor and producer alike,” said Ms Haywood.

“The demand elasticity of mince and other beef cuts, their ability to maintain sales while absorbing hefty prices rise, is legendary yet supermarket red meat departments seem determined to ignore it.”

“Millions more pounds could be earned by everyone with a scarcely detectable fall in sales if multiple retailers set out to protect their beef supply chain by excluding mince and other undervalued beef products from daily, bargain basement, inter-store price skirmishes.”

“Back in March the NBA warned that the beef sector was in danger of mincing itself to death because it had no chance of prospering if sales were focussed so heavily on its cheapest possible product.”

“The solution to this problem remains the exercising of more retail imagination. Mince sales may be booming but its evolution from a last on the list purchase for poorer people, to the most popular beef line of its day, is not a success story because if the beef sector is to survive in a recognisable form it must sell a bigger proportion of the carcase than it does now for much more money, Ms Haywood added.

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