The NFU continues to be active in highlighting some of the reasons behind this to members and the damage that this extreme price volatility can cause in an industry with a production cycle stretching over years.
In February we went on record about the outlook this year for the market and addressed the perception that imports of beef, especially from Poland were reducing prices and displacing British product. The amount of Polish beef being imported is actually quite low, but there is little doubt that increases in volume and low consumer demand all over Europe has impacted on farm gate prices.
The horsemeat scandal led to retailers, processors and manufacturers temporarily sourcing beef closer to home. Import volumes from Ireland, the Netherlands, Germany and Poland dropped from March 2012 to 2013.
Although Irish beef production has moved up a gear in the first part of 2014 and supplies from other countries have also increased from 2013, this is from an artificially low base. To put the increased imports in perspective, in March, shipments from all major importers with the exception of Ireland were actually lower than 2012 levels. With the fall in farm gate prices all over Europe, the overall unit value of beef imports was down 12% on the year.
Irish beef production in March increased 26% year on year and we have also had more cattle on the ground coming through the system, especially bulls and steers. However, this is not projected to last. Dairy cow numbers are up but suckler numbers are back and calf registrations are down. The increase in supply will be a factor in in the first half of the year but longer term forecasts are for a fall in available beef in both the UK and Ireland.
The NFU has worked to get the message out that this slight oversupply will not last and is already looking to be coming to an end. We have outlined that beef farmers throughout the country are angry that a year after horsegate, the actions of meat buyers are leading to extreme price volatility and falling a long way short of the assurances of many retailers at the time that they would work closer with farmers.
We need retailers and processors to actively work within their supply chains to reduce this damaging volatility and develop risk management options for beef farmers. We need more in the meat trade to follow the lead of long term thinkers in the industry such as Dovecote Park, who have moved to reassure their suppliers and set down threshold prices to stop the further erosion of confidence.
There is little evidence, that we are aware of, that the overall retail price has fallen, despite prices to our farmers being at their lowest for over two years. The margin being taken after the farm gate has risen from a long term average of £2.76/kg to an average in the first four months of £3.38/kg.
The NFU has worked to highlight this disparity and to call for action. At a time when retailers assure us demand is lacklustre,this increase in margin must be used to promote British beef on shelves to drive consumption.
The NFU believes that priority areas for action in the industry must include:
- Retailers must actively promote British beef on shelves.
- Processors must work to outline longer term prices to allow producers to plan.
- Any future changes in specification or the level of deductions for out-of-spec cattle must be justified and introduced with lead in periods for producers and with better communication.
- Retailers and processors should work with the NFU to develop risk management options for beef farmers.
- The whole industry must come together to work to ensure that the consumer can continue to enjoy a sustainable supply of British beef and that all parts of the chain can receive a sustainable reward from the market.
In the last few weeks, on behalf of members, the NFU has talked to:
- Major retailers and processors across the industry
- Other farming unions in UK and Ireland
- Government officials and politicians both here and in Europe
We are also encouraging members to use the agricultural show season to go and speak directly with retailers and processors to outline the impact the current price volatility on your business. Just this week, NFU officials have met in Brussels with the European Commission to highlight the impact current price volatility is having on confidence in the UK beef sector.
The NFU will continue to be active politically, taking this message from our members to retailers, processors and government. In the next fortnight we are due to meet with parties including the British Meat Processors Association, the Tesco beef and lamb team and Defra officials.
There have been calls from the processing industry that we need a vision for the beef industry. The NFU outlined our vision nearly two years ago and we are happy to work with organisations across the beef industry to achieve the aims we set out in it.