High Retail Prices Could Save UK Beef

UK - Higher retail prices could be the salvation of the beef industry and British consumers, who are spending millions more pounds on cuts each month - even though they are buying slightly less in product weight terms - are showing how the sector can move forward.
calendar icon 9 December 2008
clock icon 2 minute read

So says the National Beef Association which is worried that retailers and processors, but particularly processors, have still to pick up the message that tighter supplies are generating more overall income because shoppers are currently spending 15 per cent more on the beef they take home than they did a year ago.

“The evidence is there to see. Survey figures show that in the three months up to October 5th a 15 per cent cross the board lift in beef prices provoked an eight per cent rise in gross retail sales income to £371.4 million compared with the same period in 2007 despite there being a six per cent drop in sales volume,” explained NBA director, Kim Haywood.

"The lift in the price of beef could create a win/win situation for everyone who handles it"
NBA director, Kim Haywood.

“More recently the massive 29 per cent year on year rise in the value of mince that was confirmed in the three months up to November 2nd has helped to maintain the 15 per cent year on year jump in retail beef prices while overall sales volumes fell by only two per cent.”

“All of which means that retailers are taking significantly more money, despite selling slightly less in volume terms, and there is every justification for further rises in slaughter cattle prices so that more farmers can cover their costs as beef supplies, both home produced and imported, continue to tighten.”

And the NBA would like beef industry strategists to focus more attention on the predictive information put before them only 18 months ago by Eblex which forecast that a substantial rise in retail beef prices would generate more income for everyone in the sector because inelastic demand for basic beef cuts (stewing beef, grilling steaks, mince and burgers) meant consumers would not turn their back on the product if it cost them more.

“It is now clear that because beef is significantly more expensive in the shops more businesses, retailers, processors and producers included, have a better chance of moving into long term profit – as long as the surge in retail income is passed back and everyone in the supply chain has a share,” said Ms Haywood.

“The lift in the price of beef could create a win/win situation for everyone who handles it and if processors give up their attempts to reduce incomes earned by farmers by sitting hard on slaughter cattle prices, and make more effort to pull more money back from their own customers, then the cash flowing in from new consumer spending can be used to ensure that whatever else happens supplies of home-produced beef will continue to come forward.”

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