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French Retailers Relax Grip on Beef Margins

02 August 2013

FRANCE - A shortage of French slaughter cattle during the first half of this year led to multiple retailers potentially loosening their stranglehold on retail margins for home-raised beef, writes Peter Crosskey.

The FranceAgriMer economic model is that of an integrated breeder and finisher raising cattle primarily on grassland and relies on industry input statistics and index figures.

There is a measurable impact in the rising cost of feedstuffs, but the underlying upward pressure on production costs was generated by buildings and related livestock management.

The FranceAgriMer average boned-out carcase retail price of €6.97/kg last year rose to €7.19/kg during the first half of 2013.

In the process, estimated gross retail margins slipped from €1.67/kg to €1.65/kg. Slaughterers and cutters also took an estimated €0.02/kg hit, too, while the producer’s share of the retail ticket rose to €3.80/kg.

The FranceAgriMer economists also concluded that without subsidies, it would be impossible to cover the cost of the labour and producer capital involved. This is based on generating a national minimum wage for two people.

Since beef and pigmeat are sold through the same retail fixtures, the retailers’ estimates of making an operational loss of just under two per cent on instore butchery counters still applies and was derived from the same survey data.

Once again, it should be noted that an instore butchery counter is not an isolated business unit, but operates within a retail environment surrounded by plenty of high margin categories.

 

French retail price composition for selected generic meats

    Change in cost at abattoir entrance (1)   Change in gross margin for slaughtering/cutting (2a)   Change in gross margin charcuterie (2b)   Change in retailer gross margin (3)   Change in retail price ex-VAT: (5)=(1)+(2a)+(2b)+(3)  
Product Year Euros % Euros % Euros % Euros % Euros %
Pork loin instore butchery                      
  2011 0.3 14.00% 0.01 1.00%     -0.08 -3.00% 0.23 4.00%
  2012 0.21 9.00% -0.06 -11.00%     0.19 6.00% 0.34 6.00%
  2013 first half -0.03 -1.00% -0.02 -4.00%     0.05 1.00%    
Pork loin self service prepacks                      
  2011 0.3 14.00%         Industry + retail combined (A) -0.07 -2.00% -0.01 -0.10%
  2012 0.21 9.00% -0.1 -6.00%     0.23 12.00% 0.34 6.00%
  2013 first half -0.03 -1.00% 0.06 -4.00%     -0.04 -2.00% -0.01 -0.10%
Cooked ham: self service/counter                      
  2011 0.3 10.00% -0.02 -3.00% -0.04 -3.00% -0.02 0.00% 0.21 2.00%
  2012 0.18 5.00% -0.07 -10.00% 0.05 3.00% -0.17 -4.00% 0.01 0.00%
  2013 first half 0.02 1.00% -0.03 -4.00% 0.2 11.00% -0.08 -2.00% 0.11 1.00%
Beef                      
  2011 0.19 7.00%         Industry + retail combined (A) 0.01 0.20% 0.25 3.00%
  2012 0.54 18.00% -0.1 -7.00%     -0.11 -6.00% 0.33 5.00%
  2013 first half 0.25 7.00% -0.02 -1.00%     -0.02 -1.00% 0.21 3.00%
Kitchen ready whole chicken                      
  2011 0.16 14.00%         Industry + retail combined (A) -0.13 4.00% 0.29 9.00%
  2012 0.04 3.00% 0.02 -2.00%     0.15 10.00% 0.18 5.00%
  2013 first half 0.12 8.00% 0.01 1.00%     -0.02 -1.00% 0.11 3.00%
                       
(A) No data to distinguish supplier and retailer gross margin that year.

TheCattleSite News Desk

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