January 5, 2009
UK beef sector may suffer from consumer behaviour
The UK beef sector is not immune from the effects of the economic crisis and farm gate prices could lose ground if consumer behaviour changes, according to the latest market outlook from Andersons, an agricultural consultant.
UK's beef supply is tight as both the dairy and suckler cow herds continue to decline, resulting in the UK price being one of the best in Europe aided by the British pound and Euro exchange rate, said Andersons head of business research Francis Mordaunt.
Finished beef prices were also boosted by tighter supplies in the EU, a situation that was worsened by restrictions placed on Brazilian beef.
Prices are expected to remain strong on tight supplies, and when combined with the credit crunch, could affect demand. Reports in the UK and France stated that consumers are switching to cheaper cuts or less expensive meat.
"On this basis, although the domestic beef industry does not rely on exports, it will not be immune from the current economic downturn. Therefore, even with a reduction in feed costs it is difficult to see any improvement in beef enterprise profitability," said Mordaunt.
