Monday, 12 May 2014

Falling beef prices - serious concern for the livestock sector

The fall in the beef price being received by farmers is becoming a serious concern for the livestock sector.

Over the last few years beef prices have steadily risen peaking at over £4/kg deadweight but in the last six months in particular this trend has reversed and as a result many beef farmers are facing significant losses.

The price of beef has dropped by over 10% during the last twelve months while the price of beef on the supermarket shelves continues to stay firm or edge upwards which is causing British beef farmers significant concern.

This time last year the average price of a “standard steer” was £404p/kg which compares to a price of £362p last week and the price quoted by abattoirs to farmers continues to fall week on week.

What this means in real terms is that an beef animal weighing say £350kg deadweight will be worth £150 less this year than last year and because the margins on beef production are very low at the best of times, it seems likely beef fattening units in particular are going to face some significant losses over the coming months.

Indeed without support payments from Europe most livestock farmers in this country would simply not make a profit anyway and with such payments looking likely to reduce as we move in to the future many beef farmers will have to seriously examine the viability of their business model.

The problem is not helped by the fact that the retail outlets are dominated by the supermarkets which always brings in to question whether there is a fair market place between the many small farmers and the few big retailers. This is exacerbated by the fact that the number of abattoirs in this country is also dwindling, which further impacts on a farmer’s ability to influence the price they can achieve.

It is also interesting to learn that many of the abattoirs are owned by Irish firms and whether this influences the amount of Irish beef which is imported in to this country is open to question. Having said that Irish beef farmers are also struggling and so it may just be the low price of Irish beef which is influencing imports.

But what is clear is that on the supermarket shelves, British beef is often sold alongside Irish beef with no obvious distinction. Accordingly the NFU has called on retailers to stop mixing British and cheaper Irish beef on their shelves and to consider promotions to reignite consumer demand.

James Stephen MRICS FAAV
Rural Practice Chartered Surveyor, Wells

T: 01749 683381

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