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Challenges, Opportunities for Scottish Beef Industry

28 August 2012

This report, put together by Quality Meat Scotland, looks at the opportunities and challenges facing Scottish beef production, from the producer to the market place.

Operating challenges for primary producers

  • Developing production systems within the policy framework that deliver improved margins from the market place.
  • Land use changes resulting from the forthcoming reform of CAP and LFASS regimes, in particular the role of greening and the continuation of direct support for breeding livestock.
  • Land use changes resulting from responses to the Climate Change (Scotland) Act particularly in relation to forestry strategy but also in meeting targets for greenhouse gas emission reduction.
  • Lack of profitability from the marketplace leading to dependence on CAP and LFASS support payments.
  • Administrative framework and cost of compliance.

Operational challenges for primary processors

  • Squeezed operating margins as a consequence of:
  • o Reduced supplies of cattle.
    o Regulatory costs associated with food and environmental safety.
    o High cost of managing wastes and animal by-products.
    o An inability to pass on fully the increases in cost base due to retailer market power, a highly competitive marketplace and consumer resistance to increased prices.
  • Additional costs resulting from unintended consequences of labelling and food safety regulations.
  • Volatility in costs and revenues from edible and non-edible fifth quarter products.

Meeting the challenge – primary producers

To meet the challenges facing the primary production link in the supply chain a number of actions are required including:

  • Building confidence through the development of an integrated and supportive policy framework to encourage primary production, including retaining and maximising the budget for a coupled calf payment, ensuring support payments and activity criteria reflect land capability and using CAP pillar two to support investment to maximise business efficiency and productivity.
  • Increasing investment in applied research particularly the measurement and science of greenhouse gas emissions.
  • Increasing investment in knowledge exchange formats for example monitor farms, experimental husbandry farms, benchmarking groups and technical advice.
  • Developing a framework for the transmission of market signals up the supply chain through improved feedback of food chain information.
  • Developing easily accessible and applied skills development programmes.
  • Promoting the industry as an attractive and sustainable career opportunity.
  • Working to create opportunities for suitably qualified individuals to establish businesses.
  • Investigating ways to increase the quality of calves from the dairy herd for beef production.
  • Acting promptly on the recommendations that will emerge from the investigation into reducing red tape under the chairmanship of Brian Pack.

Meeting the challenge – primary processors

To meet the challenges facing the primary processor link in the supply chain a number of actions are required including:

  • Building confidence among the processing sector through the development of an integrated and supportive policy framework to support risk capital investment in new product development and infrastructure among all businesses not just small and medium sized enterprises.
  • Minimising the bureaucracy and costs associated with the wide ranging regulatory framework including reform of beef label regulations, TSE regulations, environmental regulations and the definition and consistency of categorisation of wastes among Government agencies.
  • Acting promptly on the recommendations that will emerge from the investigation into reducing red tape under the chairmanship of Brian Pack.
  • Prompt response to the Scudamore Report recommendations with respect to Scottish delivery of meat hygiene and food safety.
  • Action to bring forward the retail adjudicator.
  • Identifying ways of maximising the value of edible and non-edible by-products of the abattoir process through re-classification of specified risk material and other by-products, e.g. mesentery fat, cattle gut, tallows, fifth quarter and hides.

UK market challenges

  • Weak economy leading to consumer focus on value for money in their shopping baskets.
  • Polarisation in the market place between higher value products with provenance and economy products and also between high-end retailers and low-end retailers leading to a “squeezed middle”.
  • Importance of lower value mince and stewing cuts in the portfolio of beef products purchased.
  • Improving and demonstrating product quality so as to secure sales.
  • Growing population to feed.

Meeting the challenge in the UK Market

  • Increase promotional effort to keep the Scotch brand in front of consumers and develop messages in relation to value for money and flexibility/versatility of beef cuts.
  • Widen the range of value added products using forequarter and fifth quarter raw materials.
  • Promote the use of available and emerging technology to improve consistency of eating quality.
  • Promote cookery skills to secure and enhance quality eating experience.
  • Across the school curriculum incorporate greater awareness of the role of beef as part of a balanced diet, and the development of the cookery skills relevant to its use.
  • Protect and promote the Scotch Beef PGI brand in the UK.

European and global market challenges

  • Growing population to feed.
  • Access to some markets prohibited or limited.
  • Volatility of currency exchange rates and credit risk of trading with some economic partners.
  • Changing international trade policy frameworks.

Meeting the challenge in non-UK markets

  • Scottish Government support and assistance in working with UK Government to increase number of countries for which necessary protocols and authorisations are in place to allow the export of beef.
  • Increase support and assistance to actively research and facilitate promotional activities in key target markets.
  • Facilitate credit insurance in respect of sales to new markets.
  • Protect and promote the Scotch Beef PGI brand.

August 2012

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