Supermarket Discussions on Future of Beef Industry

UK - With beef prices around five per cent lower than this time last year and recent figures showing a drop in the beef herd of around 1.5 per cent, NFUS is having talks with the major retailers on the future of the Scottish beef industry.
calendar icon 5 July 2007
clock icon 2 minute read

NFUS is sending a strong message to farming’s biggest customers that the farmgate price needs to rise if beef production is to have a sustainable future. NFUS is urging the retailers to provide a long-term commitment to beef producers, many of whom will question their future in a sector marked by rising production costs and static or falling prices. In particular, NFUS is urging the major supermarkets to establish direct relationships with farmers to improve communication in a fragmented supply chain.

NFUS President Jim McLaren said:

“We are seeing some positive moves in both the arable and dairy markets at the moment, but these just aren't being replicated in the beef or lamb sectors.

“Farmers are seeing increasing consumer support for local produce like Scotch beef, yet this is completely failing to translate into a sustainable farmgate price.

“I have been encouraged by the willingness of the supermarkets to engage in the discussions, but their words of support need to translate into action. With lengthy breeding cycles, farmers have to make long-term investments in the beef industry – these have to be matched by a long-term commitment from their customers. And in the continued absence of that, farmers are increasingly likely to switch away from beef production. The subsidy tie-in to the sector has gone; it is now down to the market to create the incentive to remain in the industry – I just don’t think that message has been absorbed by the rest of the supply chain yet.

“There is no doubt in my mind that the communication gap between farmers at one end of the supply chain and supermarkets at the other is far too big. The retailers need to understand the pressure being felt at the farmgate, just as farmers need a better understanding of what the market is looking for. NFUS can fill that gap, but I want the supermarkets to establish direct relationships with farmers – that should include exploring all options for direct contracts.

“Of course, the future of the beef industry doesn’t lie solely in the hands of supermarkets. Farmers themselves need to continually strive for efficiency and, crucially, they need a fair operating environment. That means the efforts to ensure foreign beef imports meet our legal standards and to remove artificial rules like those on beef on the bone remain critical as well. Having said that the supermarkets view themselves as market leaders and the industry now requires them to act as such. Otherwise, they may find the supply of Scottish beef jeopardised.”

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