Survival in beef is aim
Livestock farmers from all over the South West of England attended a one-day conference supported by the South West Regional Development Agency and organised by Meat South West, the National Farmers Union and Taste of the West
to discuss the future of the red meat industry. Fred A'Court reports.
The beef industry in the South West will not survive with its present supply chain working relationships and pricing structures, NFU regional director Anthony Gibson told the conference. The industry is miles away from profitability and although the return of beef exports will bring opportunities in the medium to long term there is also the possibility of beef production following the chicken industry from the South West to the East of England where costs are lower. The losses being made by farmers average £165 per head of lowland suckler animals and £89 for each intensively finished animal, he said. Only the most efficient top third of farmers are making a profit and then only £8 for each intensively finished animal. Even those farmers deemed the most efficient are losing £164 on sucklers. "In a nut shell that's the problem." Decoupling means there are more animals in the marketplace than justified and that means lower prices, he added. The fact that 48 per cent of West Country beef is sold to supermarkets ought to be a strength because they are by no means bad customers but it is a weakness because of their pricing structures, he claimed. Profitability in the South West is well below the national average. "The dominance of the supermarkets as our customers is the reason for that"
Sheep farmers fared slightly better because they were able to export some of their produce, said Mr Gibson. "The lifting of the beef export ban will have significant impact in the medium to long term but will not help in the short term." There will be no let up in imports, he warned. The South West needs to establish grass fed beef as a premium product, he said, but extensive grass based finishing was more challenging in terms of the net margin made than intensive finishing. "Cattle could follow chickens to the East of England where feed is cheaper" said Mr Gibson. Decoupling will change the situation by 2010, however. "There will be a 16 per cent increase in prices on the back of nearly nine per cent less cattle. It's good news if the industry can survive in the South West till then." Mr Gibson told the conference that price is the most potent factor in consumer purchasing decision followed by taste. Local and regional food is of interest to 70 per cent while 52 per cent regard British produce as of a better standard than imports although regional branding is better perceived than British. Niche branding of, for example, a specific region was a small but significant factor. Trust and transparency was missing from food chain partnerships, Mr Gibson warned. "Forward price contracts must be agreed between farmers and abattoirs, and supermarkets must stand behind that agreement." Farmers have to see that there will be profitability in beef in five years time, confidence has to be put back into the industry, South West farmers have to find special differences with which to market the region's beef, and the whole supply chain has to work together to achieve efficiency, Mr Gibson concluded. "Supply chain partnerships can do that part but first there is the need for a price structure so that everyone gets a cut."
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