Multiples Should Use Their Beef Clubs

FARMING UK - The beef industry is in need of rescue – so supermarkets and the food service specialists should take advantage of consumers' growing acceptance that food is becoming more expensive and lift their retail price to accommodate the increased cost of turning out high specification cattle.
calendar icon 31 August 2007
clock icon 3 minute read

This advice comes from the National Beef Association which notes that the doubling of this season's feed grain price to around £140 a tonne will add about £70, or 21p-24p per dwkg, to the cost of delivering a winter-finished animal to the market.

It fears that if retailers, and their processor suppliers, do not use their much vaunted Beef Clubs to spread the message that a price lift of 21-24p per dwkg will be offered when this season's suckled calves are presented for slaughter then additional grain costs will be taken out of the purchase price of this autumn's store cattle instead.

And believes that if the latter is allowed to occur there will be deep, and permanent, structural damage across the breeding sector which cannot take such a deep income cut because it is already operating at a debilitating loss.

"Consumers are becoming increasingly aware that basic food items like meat, bread, eggs, and milk are routinely under priced and retailers need to take advantage of the public's developing tolerance of world-wide agri-food inflation and use it to secure their domestic beef supply chain," explained NBA director, Kim Haywood.

"If the initial retail sector response to industry demands for a positive price indicator is negative then it will have to consider that beef farmers are in a genuine quandary. The general feeling among finishers is that they will give up feeding cattle if they cannot cut back store cattle purchase prices by £70 a head."

"While breeders, who have routinely been losing £450 a head on their cows and face further reductions in their SFP, are very well aware that they cannot afford to take another income cut."

"This means that both breeders and finishers are very close to saying enough is enough, selling cattle for less than they cost to produce is unsustainable, and are ready instead to begin shutting down the beef side of their businesses.

According to the NBA many finishers will produce, and sell, more grain instead of feeding it to cattle. Lowland breeders will take similar action while those in the uplands will cut back cow numbers and put more effort into earning income through government sponsored environmental schemes which demand only minimal stocking rates.

"Crunch time is coming for domestic beef supplies. Cash starved breeders and finishers cannot be left to fight amongst themselves for stale crusts, warned Ms Haywood.

"If supermarkets and food service beef specialists do not give real, and positive market signals they will soon find themselves in the same situation as their colleagues have with milk which for years was purchased at such ridiculously low prices that critical numbers of producers simply gave up."

"Retailers have to ride the food inflation bus. The first step is to raise consumer prices so that this year's £70 a head lift in grain feeding costs for winter finished store animals can be accommodated through an additional 21p-24p per deadweight kilo for slaughter cattle."

"They can do this through their processor's Beef Clubs and if they do not then Beef Club members should be asking why."

"The second step is to use this initial advance as a stepping stone to raise retail prices to a level that allows be paid for high specification cattle because that is the only way even efficient farmers will be able to cover their long term costs," Ms Haywood added.

Further Reading

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