Welsh abattoir businesses need further investment

Hybu Cig Cymru – Meat Promotion Wales (HCC) has recognised cattle, sheep and pig slaughtering businesses as contributing £461 million every year to the Welsh economy. 

However, if this is to remain, further investment backing must be injected into the sector.

At just under 90%, industry throughput is dominated by large abattoirs. But it is the small and medium-sized businesses that have been recognised by HCC as playing a significant part in supporting local communities, food businesses and the rural community.

HCC’s Assessment of Capacity in the Welsh Red Meat Slaughtering Industry named a series of challenges that face the red meat industry in Wales, some of which have a knock-on effect impacting the abattoir sector.

These are:
• Declining livestock numbers
• Regulatory compliance – an increasing amount of regulation
• Limited plant infrastructure – specifically chillers
• By-product disposal arrangements – disposal generally outweighs margins
• Decreasing value of hides, skins and offal
• A shortage of skilled slaughter and butchery workers
• Limitations on succession planning and its impacts on business development, and
• Limitations of customer base.

It was identified that cattle throughput through Welsh abattoirs in 2014 equalled 120,400 head, worth roughly £186m. Sheep was at 3.4m head, worth around £271m, with pig throughput reaching 32,900 head, worth approximately £4m.

“The Welsh red meat slaughtering industry is therefore calculated to be contributing approximately £461m per annum to the Welsh economy, demonstrating the significance of the sector,” said the report.

It also highlighted that, for many years, the sector had faced continuous underlying problems of fluctuating, and at times low, profitability. The industry generally suffers from under-investment, especially among small and medium-sized enterprises, whether to meet the stringent hygiene requirements or the demand from consumers and retailers for more innovative and convenient foods.

“Margins have also come under pressure from lower fifth-quarter returns, costs of by-product disposal and the sourcing policies of the multiple retailers and other customers. All these factors have led to a continuing trend of fewer abattoirs operating, both within Wales and across Great Britain as a whole.”

The maximum combined capacity of the abattoirs slaughtering cattle, sheep and pigs in Wales, as the report estimated, is approximately 17%, 41%-72% and 32% respectively. These figures are heavily dependent on the market, commercial and individual business influences and trends.

The maximum combined capacity refers to the total slaughtering posibility of all the red meat abattoirs in Wales where structural or operational constraints of the site, trading conditions and costs of operation and potential slaughtering opportunities are taken into account.

The report concluded by highlighting that the challenges the industry is facing will have a substantial impact on the future resilience, performance and profitability of the sector. “These factors raise concerns over the long-term viability of Welsh abattoirs without future investment in this sector.”

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