Meat Supply Chain Faces Crisis

UK - Red meat supplies are tightening across Europe and unless the multiple retailers desist from keeping consumer prices artificially low as a promotional tool they will be caught out when the meat supply chain can no longer deliver the volumes required.

1 April 2008

4 minute read

Europe

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"Ultimately consumers will have to pay more for meat and increased market returns will need to be shared equitably through the supply chain."

Outgoing MLC Chairman Peter Barr

This was the stark warning from Meat and Livestock Commission chairman Peter Barr following the last-ever MLC Commission board meeting last week. From 1 April 2008 the new statutory levy board takes over, the Agriculture and Horticulture Development Board (AHDB). Its statutory functions encompass meat and livestock (cattle sheep and pigs) in England; horticulture; milk and potatoes in Great Britain; cereals and oilseeds in the UK.

On 31 March the Meat and Livestock Commission was dissolved after 41 years of operation.

Outgoing MLC Chairman Peter Barr said: "It's good to see upwards movement in farmgate livestock prices. This is much needed, though there is still a way to go to reflect true cost of production in each sector.

"However, the red meat processing industry has been only sporadically successful in passing the farmgate price rises on to their own multiple retail customers.

"Destructive price competition and deep-cut meat promotions are not sustainable. The days of selling protein too cheaply are over.

"Processors are being squeezed and there will be unnecessary business failures as a consequence.

"There is a growing shortfall of raw material as the European livestock farming sector contracts as a result of changes to the Common Agricultural Policy (CAP) and poor profitability. This shortfall will only be exacerbated as world population expands

. "The industry is potentially reaching a point at which two things will start to happen: it will be unable to meet the peaks of demand caused by retail promotions - particularly on manufacturing beef used for mince, and we will see processing businesses go to the wall.

"Ultimately consumers will have to pay more for meat and increased market returns will need to be shared equitably through the supply chain to ensure processors and producers can survive and consumers can continue to buy meat.

"This can best be achieved by the whole chain working together in a more trusting and transparent way. As MLC winds up, that is one of my key messages."

The UK National Farmers' Union President Peter Kendall challenged the new Board to make a real difference for its farmer and grower levy payers.

"The new AHDB has the opportunity to make a fresh start in responding to the many demands and challenges that lie ahead for farmers and growers in a rapidly changing global market, and it must deliver on that," he said.

"We have been calling for the Board to make sure that the new structure enables continued focus on the needs of the individual sectors but also drives much better opportunities for synergy and efficiency savings where there is a mutual benefit for levy payers in different sectors.

"Each levy body will, of course, have its money ring-fenced and so the future for each sector will be determined by its own levy body. However, over time, we hope the six sector companies will join up their thinking on issues such as research and development, technological transfer, market intelligence and even on promotion. Such collaborative thinking must not, of course, ever compromise the rights of sectors to manage their own affairs.

"Overall, this is a massive opportunity for the levy bodies to refocus and provide a really modern and effective service offer to levy payers across the sectors."

Welcoming the launch, Minister for Sustainable Food and Farming, Jeff Rooker said: "This is a significant milestone in the restructuring of the statutory levy boards. The new structure will ensure better value for money through improvements in the efficiency and effectiveness of service delivery and levy payers should reap the benefits of these changes over the next few years.

"I would like to pay tribute to the work already carried out by the new Board, the sector companies, and the staff of all five boards, in ensuring a smooth transition to the new structure, especially from a levy payer perspective. I would also like to thank the outgoing levy board Chairs and their Boards for all the valuable work over the years and their constructive approach to helping the new board."

John Bridge, Chairman of AHDB said: "This is a great day. I know we have some immense challenges to face in the agriculture and horticulture sectors but I believe we have the structures in place to respond effectively to these challenges. Getting to where we are today has been down to good team work and I would like to thank all those who have helped me and our small team over the last 16 months."

Sir Don Curry, adviser to Defra on Farming and Food Strategy, also welcomed the new board saying: "The agriculture and horticulture sectors are experiencing an unprecedented period of change. It is therefore essential to have a new levy board structure which is 'fit for purpose' in order to provide appropriate direction and support. This marks a new era for the industry and I am convinced that there are significant efficiency savings achievable by the new board which will benefit all sectors."