Beef Retailers Must Learn From Lamb Collapse

UK - The National Beef Association has warned that misinformed retail reactions to high, short supply driven lamb prices demonstrates that they have still to realise the same development could soon explode on beef.
calendar icon 5 May 2010
clock icon 3 minute read

Currently slaughter lambs are selling at a record seasonal high and there are clear signs that even shorter supplies at EU and world level mean these values will be maintained.

As a result those sheep farmers who have survived years of selling stock for less than the cost of production are delighted that their perseverance has at last paid off – and retailers are screaming for more lamb at lower prices.

“It is alarming that no one on the retail side is acknowledging that sheep farmers’ organisations have, over the last five years, continuously warned that if their members were not paid more for their lamb they would be forced to give up sheep – and a national supply shortage would inevitably develop,” explained NBA director, Kim Haywood.

“This same message has also been advanced by the NBA on beef and its point is underlined by the entirely avoidable supply shortage, created by myopic retail price policies, that has suddenly hit the sheep sector.”

“We can only repeat that a similar situation will develop with cattle unless retailers take a longer view on market value and agree to pay a price for finished stock that delivers genuine profit to the efficient feeder and encourages them to buy store cattle at a cost that covers the breeder’s expense of keeping a suckler cow.”

The NBA is confident that the current UK average of around 275p deadweight for a typically commercial R4L steers or heifers falls well below what is necessary to deliver future domestically produced beef cattle on the scale the industry requires.

“”Prime cattle prices are retreating for the fourth successive month so even though they can see what has already happened with lamb they are still refusing to give beef farmers enough income to stay in business,” said Ms Haywood.

“This short sightedness ignores obvious international market developments which clearly indicate that global, EU and UK, beef cattle supplies are rapidly shrinking to levels that will fall soon well short of rising consumer demand – and a price explosion will inevitably follow.”

“The NBA would prefer retailers to cooperate in helping to maintain an even sized national herd by immediately offering much more sensible prices for processed beef than they are doing now.”

“This would prevent the abandonment of even more beef farm businesses and further declines in the national beef production base. So even supplies would be maintained and future cattle numbers would not fall to levels so low it would be impossible to service the market and an avoidable price explosion would burst on the beef sector too.”

“Unless beef farmers are encouraged by increased market income to turn out cattle at more than current numbers UK production will sink to a level where only surviving farmers will be in a position to enjoy the resulting take-off in prices – and retailers will once again be shouting that everything has gone wrong,” Ms Haywood added.

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