August 30, 2010

Low prices threatens UK beef production

According to industry analysts, the continuing low price is threatening the long-term sustainability of UK beef production.

Industry representatives have teamed up to deliver a message to the beef supply chain following a year-long decline in prices, which has left many producers operating at a loss. It comes as concerns mount that production costs will continue to increase because of the expected high cost of food and bedding this winter.

Livestock chairmen of farming unions in England, Scotland, Wales and Northern Ireland said in a joint statement: "We hear the right signals from the supply chain about the need to secure supply on a long-term basis, but the short-term approach currently being taken illustrates that the market is failing to deliver. At current prices, beef producers will be unable to afford to produce beef this winter and some are starting to seriously question their future in the industry. This situation is made even more precarious by the volatile market conditions for inputs which we have witnessed in recent weeks. The drought in Russia, and reduced harvest yields in other parts of Europe, is already having a major impact on the price of grain, while fuel prices also remain very high."

Retailers' demand for beef remains strong and both sales and supply have increased. The unions said many of the sales were driven by supermarket promotions but retailers must look at ways to ensure producers receive a greater market share.

"It is imperative that the supply chain gives the right signals through long-term commitments to a sustainable price. This is the only way to give producers the confidence to go forward, go to the expense of finishing cattle this winter and deliver what the market demands In order to install confidence and drive sustainability, the retailers and processors have got to start backing up their claims of commitment to UK beef farmers," they added.

The organisations said some positive initiatives to give farmers better returns have started in parts of the chain but these need to go further and should be backed by a greater commitment to UK produce.

The statement concluded: "This really is a wake up call; producers must start to get a fair share of the retail price if they are to remain in production. Given a clear price commitment from the supply chain, UK farmers can rise to the challenge of producing a quality product for the UK consumer."