Blog: It's a finally balanced beef market - what's the solution?

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John Royle_170_255John Royle is the NFU's chief livestock adviser.

He writes:

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Of equal importance is that retailers and renderers also recognise the Code. We ask that processors, supported by their customers (the retailers), do the responsible thing and demonstrate their commitment to treat their beef suppliers fairly.

So, how can farmers tackle volatility in the finely balanced beef market? First and foremost, let’s have a transparent market. All processors need to be clear what their terms and conditions are and should continue to work with beef producers to develop a marketing strategy that achieves the best possible returns for all points in the supply chain. This shouldn’t be as hard as the industry makes it.

That said, could the future lie in shorter supply chains with farmers reclaiming power in the market place and taking a more proactive role in marketing their stock, as well as becoming more focused on what the market is demanding?

quote mark graphic for web use_63_66Farmers working together could be more efficient and benefit from exemptions in competition law

Are Producer Organisations the answer? A recent EU Commission consultation on competition law and POs in the beef and arable sectors looks to introduce new rules that allow POs to negotiate contracts for the supply of their members’ products.

Farmers working together could be more efficient and benefit from exemptions in competition law. The aim of the PO, as long as it does not exceed 15 per cent of national production, is to concentrate supply, place its members’ products on the market and optimise production costs – all could help manage volatility in the beef sector.

The other major factor could be a greater diversity of export markets.

Britain will be eligible for BSE negligible status from the OIE in 2018, and the government must start working on an application for status now. We want our processors, supported by AHDB and government, to be developing these markets in readiness. Looking at US ground beef prices, and the shift in Australian trade, the EU microclimate of a depressed beef industry is not a reflection of the wider world, but is rather a result of the somewhat inward turned market that resulted from the BSE crisis.

The prospect of POs and expanding our global trade in beef is something we must be working towards.