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Who Will Bear the Cost of Supermarket Promos?

22 May 2012
EBLEX

UK - Shrinking global supplies of beef and lamb and a rising population will push up prices for producers and processors in England – but it won’t all be plain sailing.

That was the forecast from EBLEX sector director Nick Allen as he closed the organisation’s first northern conference in Wetherby last week.

He followed presentations by a range of EBLEX and wider industry speakers, including Eddie Punch, General Secretary of the Irish Cattle and Sheep Farmers' Association, Peter Mitchell, Purchasing Manager, OSI Food Solutions who supply McDonalds, and Peter Morris, Livestock Development Manager with VION.

“The destiny of this industry is in our own hands,” said Nick at the event at Wetherby Racecourse.

“We need to keep our eye on the big picture and adapt our businesses accordingly. Demand is outstripping supply globally which will push up prices and presents fantastic opportunities – but there will be hiccups. We have seen this in recent weeks with the lamb price suffering, partly because of some farmers holding on to lambs for too long and putting too much weight on them to try and cash in on the higher prices. All this has done is push down prices as there is a limited market for fat lambs.

“The exchange rate is also an issue. Sterling has strengthened marginally against the Euro in recent weeks but this will not necessarily impact the export trade. Trade will continue, it is simply the money we receive for that trade that will be affected. However, we are obviously watching the Euro crisis with concern and it is impossible to predict what will happen there.”

He said there was still significant scope for many producers to lower their production costs which will improve both their bottom line and their carbon footprint. And although beef remains a popular meat, around 50 per cent is still sold as mince, which affects sales of other cuts.

“Minced beef is very versatile but it means many supermarkets focus on this for promotions to get customers through the door. This means that mince is often an anchor rather than a platform for other beef sales,” Mr Allen said.

“A debate needs to be had on who bears the cost of these supermarket promotions – the supply chain or the supermarkets?”

All presentations from the day are now available to view at http://www.eblex.org.uk/events/news-northconf-a.aspx

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