A determined effort by supermarkets to dampen down steadily rising prime cattle prices instead of accommodating the higher costs faced by their processor suppliers has marked a new battle line in the fight for beef industry survival.

photo courtesy of www.jennifermackenzie.co.uk

So says the National Beef Association after noting the temporary success the multiples have had in holding down market averages despite the re-opening of export trading on May 3 rd .

“This is a tactic that will backfire on them so retailers need to realise that they can construct more secure domestic supply chains if they accept that the resumption of trading with other EU countries has torn up the rule books and new distribution patterns are already being established,” warned chief executive, Robert Forster .

According to the NBA supermarkets can develop long term supply security for home produced beef most easily if they first of all send out encouraging price signals that will persuade breeders to put cows in calf instead of cashing them on the high flying manufacturing beef market.

And then give their processor suppliers incentives to concentrate on developing profitable domestic supply chains instead of being lured overseas by higher paying export customers.

“If they stick to the old rules and keep on squeezing farmers and processors they will lose out on both, “said Mr Forster.

“Processors, some of whom already face severe cash flow problems, were desperate to create a price plateau because it was the only way they could break the chain of constantly paying more for cattle than they are recovering from customers whose retrospective payments constantly trail price increases when the market is on the rise.”

“However even slaughterers caught in a supermarket armlock will not be able to hold down prices for long.”

“This will intensify the struggle between them and their customers which will either result in the multiples accepting that UK cattle prices are moving onto a permanently higher, post-export, price plane – or force more processors to create financial breathing space for themselves by seeking out export customers that can keep them in business by paying more for their beef.”

“Current market pressures are both supply and demand driven and are already irresistible. If the supermarkets do not accept that the only way they maintain supplies of UK beef is to pay enough to keep it here they will lose it to higher paying buyers on the other side of the Channel,” he added.

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