National Beef Association calls for better contracts

Processors should offer cost-based supply contracts that contribute to future beef supply stability, according to The National Beef Association (NBA).

Capturing a wide spread of well-organised, professional feeders, able to turn out large numbers of in-specification cattle over 2011 and beyond, would be far better for the industry than the current situation, it says.

The NBA believes that many established finishers are holding off buying replacements this autumn, leading to a drop in breeding herd revenues. There will be a major reduction in prime cattle through larger plants next year as well.

The Association expects processors supplying large supermarkets to sign up a life-raft of feeders. It also suggests they could offer at least 40p more for cattle finished after the New Year, followed by three monthly, price reviews in which adjustments take account of cattle supplies and cost increases.

Slaughterers in the Republic of Ireland are maintaining throughput with pre-nominated prices for steers and heifers around 35p-42p above current market averages, or establishing schemes to bring dairy-bred bulls into grass or forage-based finishing systems.

"Feeding farms are an abattoirs life-blood, but large numbers of finishers are nervous about their reliance on weekly price changes, mainly arranged as a result of a series of inter-abattoir Friday phone calls, and are starting to say that if they are to spend good money re-stocking their yards, they need more reassurance about future revenue, said NBA director, Kim Haywood.

If processors want forward commitment from their suppliers, they must make forward commitments themselves.

"Feeders are understandably nervous about rising grain, straw and fuel costs and it is no surprise that their confidence is evaporating when prime cattle values are falling on a weekly basis at the same time."

Processors are also invited to test an accurate, cost-based, formula and see what kind of reaction they get. "Finishers in Ireland have been offered contracts based on standard costs to pull them in and future pricing structures could include a guaranteed minimum as well as a meaningful bonus for hitting the bulls-eye on a range of specification targets," said Haywood.

"Similar imagination, based on acceptance that cattle supplies will soon become dramatically tight, is needed here in the UK. Processors supplying supermarkets cannot risk being left high and dry because the best-organised finishers have deserted them."

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