The total value of exports of meat, processed products, edible and by-products exceeded £1.3bn in 2008. With the pound still down 10% on May 2008, exports have continued to flourish this year, pushing farmgate prices higher. Prices for cattle, pigs and sheep have risen 9%, 25% and 30% respectively.
Speaking at the 12th annual Langford Food Industry conference, Richard Brown, director of food consultancy firm GIRA, said that the devaluation of the pound has been the “salvation” of many British farmers, which arrived as “a breath of oxygen to keep farmers alive”.
He warned, however, that production costs remain high and if the meat sector is to remain sustainable and competitive in the future, the structure and power balance of the meat industry must change.
“To date, there has been totally unacceptable distribution of margins from the production of meat,” he said. “If the industry is to survive, we need higher long-term prices.”
Quoting supermarket domination as one of the main barriers to this objective, Brown said: “Producer clubs have a long way to go and I am disappointed in what I have seen so far. Until retailers give processors and producers a real feeling they will not be shafted, it is difficult to progress.”
Bob Bansback, economist and advisor to AHDB Meat Services, agreed that there needs to be improved communication and cohesion up and down the meat chain. He warned that the exchange rate situation has “masked some of the realities of our competition situation in the UK”, and said that the one of the main challenges facing the meat industry is the “ability to compete with other countries at home and in export markets”.
The UK’s ability to compete would come under increasing strain if a World Trade Organisation (WTO) agreement were to be reached.
“The WTO discussions seem to have gone to bed with the depth of the recession, but they are likely to come back,” said John Bourne, head of livestock at Defra. “A free-trade agreeement would have clear benefits for the EU and UK, but would place downward pressure on production prices in Europe. I believe the WTO will be a bigger influence on future livestock production than CAP reform.”