Change needed in the red meat industry, says expert

The head of agriculture and research for meat processor Dunbia has encouraged the meat industry to embrace change.

The head of agriculture and research for meat processor Dunbia has encouraged the meat industry to embrace change.

A Nuffield Farming Scholarships Trust Report by Jonathan Birnie, sponsored by Worshipful Company of Butchers, highlighted that it is essential that the UK industry addresses issues that are restricting profitability and hence the sustainability of individual farms.

The report, Facilitating change within the red meat chain through knowledge transfer, feedback and technology uptake, claimed the supply of meat against the demand for it is expected to fall. This will subsequently increase competition of the product.

Birnie noted that many of the markets that become available will provide lower returns to the UK. Consumers demand value for money and, in the UK, have demonstrated they are unwilling to substantially raise the amount they are prepared to pay for meat within a short timeframe, said Birnie.

Meat is an important component in the diet of the majority of UK households, but there is a variety to choose from and, where buyers have alternatives, they make judgements based on a range of criteria, including price, convenience, taste and consistency.

Value is one of the key criteria, and if, for example, the consumer judges beef to be better value than chicken, pork or lamb, he/she is likely to purchase. This mechanism provides an element of internal price regulation for meat sales in the UK.

According to Birnie, this means that although we can expect to experience a gradual and ongoing rise in the price consumers pay for their meat, we shouldnt expect to see large jumps in price over short time periods in order to maintain supply volumes and avoid a price crash.

Improving market focus

An important area for the industry to concentrate on is improved customer and market focus, said Birnie.

It was noted that strong technical competence from the producer is often linked to high customer and consumer awareness, as well as an understanding of what the marketplace wants. Pork and poultry producers tended to be more aware of market demands than beef and lamb producers.

I came to the conclusion that a major influencing factor in this was the regularity of contact with the processor they supply, explained Birnie.

The intensive sectors have much more frequent contact, driven through their regular output of finished pigs, chicken or milk. This often means they are also more attuned and responsive to market changes.

Meanwhile, it was pointed out that beef and lamb producers often have long gaps between contacts with their sales outlets, resulting in a limited amount of information flow and customer awareness.

Despite this, Birnie said that he did meet with many beef and sheep producers who were in touch with their market, even with a lower level of contact with their primary market. One concern expressed by several people (mainly referring to beef) was that the economic signals being received from the livestock markets were misleading, because they were often frequented by buyers for more specialist markets and, as a consequence, did not fully reflect the buying habits of the UK consumer.

Financial feedback

A factor that influences producers responsiveness with market demands is financial feedback. Birnie explained that intensive sectors were in constant production, so receive regular cash flow, which provides a high level of financial feedback. These sectors are also categorised by shorter production cycles.

However, the beef and lamb sectors are different. Smaller farms and irregular supply patterns mean months can pass without any financial feedback, particularly in the sheep sector.

Generally speaking, larger production units are very focused on market requirements, but downstream calf producers are almost completely detached and tend to produce what sells well in the livestock market, which isnt always reflective of the final value of the animal.

In many ways, this is understandable, because the majority of purchasing farmers have virtually no idea of the breeding or previous rearing system of the animals they buy, commented Birnie.

In an ideal world, calves, reared calves or store animals should come with figures which would indicate their likely future performance, but in reality, this type of system is still some distance away.

It is essential that no matter what production system a farm (or a business) operates, it is vitally important to understand what the market wants and to focus production on it.

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