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17/07/07
Rising grain and fresh milk prices are gifting the major supermarkets
with a long awaited opportunity to lift the value of retail beef
and build the cross-supply chain income cascade that is the only
way to move well-organized beef production into profit.
NBA chief
executive, Robert Forster
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So says the National Beef Association which wants to underline
the importance to UK agriculture, and the beef industry, of the
40 per cent increase in ex-farm grain prices since April and the
60 per cent per cent rise in the July spot price in liquid milk
compared with last year.
“Efficient breeders and finishers are still routinely selling beef cattle
for significantly less than the cost of production and unless there is a compensatory
lift in retail prices, and an income cascade led by increased consumer spending
is created to cover the costs of retailers, processors and farmers, the beef
industry will continue to face a hesitant future because no one in the supply
chain is making money,” explained the Association’s retiring chief
executive, Robert Forster.
“The market messages, each of them driven by the contracting national and
international supplies that are already impacting on grain and milk are clear.”
“They underline the fact that all domestic commodities, including beef,
have been savagely under priced for too long and reinforce the long held proposition
that retailers can no longer ignore the fact that the time for an urgent and
permanent upward adjustment in the value of all temperate primary farm products
has at last arrived.”
According to the NBA all retailers have two important reasons to raise their
beef prices immediately. The first is the additional cost more expensive grain
will hoist on finishers who are already selling cattle at a loss.
And the second is that even the UK’s tightly controlled primary product
markets cannot escape the new pressures on world food markets created by expanding
global demand and contracting production resource
“The grain led cost squeeze on poultry and pig production through higher
grain prices will soon provoke a rise in the retail price of chicken and pork – and
sensible retailers should see this as a God given chance to introduce a proportionate
lift in the beef retail price to maintain shelf value differentials,” said
Mr Forster.
“The interest raise squeeze on consumer spending is not an excuse to delay
this because householders faced with cuts in disposable income will be driven
away from expensive meals in restaurants and back to much cheaper fresh food
purchases which they will cook themselves.”
“This will happen at the same time as there is worldwide food price inflation
as a result of more people earning enough money to join the international meat
eating club and an increasing squeeze on food production as more of the best
land is diverted into bio-fuel crops or acquired for urban development.”
“This wave is already hitting the UK’s grain and dairy sectors and
from the point of view of long term red meat supply sustainability, and their
own beef supply security, it is important that retailers introduce their own
counter measures now.”
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