25/02/08
Tighter supplies at world, EU and UK levels will continue to support
domestic slaughter cattle prices and this means retailers must
adopt a new approach and secure their supply chains by paying processors
much more for beef than they do at present.
The National Beef Association is certain that new international
and domestic beef supply pressures mean it is no longer sensible,
or realistic, for slaughterers to force down ex-farm prices as
soon as they think more finished stock might be coming forward.
And that current value fixing tactics in which retailers consistently sell beef
for less than the cost of production, and leave farmers and processors to operate
with no profit margins, will have to be abandoned as outdated if the beef sector
is to move forward and enjoy the benefits of an on-going, farm to plate, supply
chain that works.
“The time has come for a complete re-think. Coupled subsidies disappeared
more than three years ago, world food supplies are getting shorter by the day,
and both retailers and processors can no longer afford to risk future supplies
by consistently under-pricing their producers’ cattle,” warned NBA
director, Kim Haywood.
“The traditional response of abattoirs faced with an uncomfortable period
of unexpectedly high cattle prices has been to bear the loss stoically but be
alert for the earliest possible opportunity to force down the market and recoup
their margins - which usually means as soon as they get a sniff that more animals
might be on offer.”
“But what they have to do now is change tactics because it is them, not
the feeder, who is going to be squeezed unless they react by making sure that
retailers understand they must pay more for deliveries and allow their suppliers
to cover the cost of increasingly expensive cattle and enjoy a sensible net margin
too.”
“Processors are in more direct contact with retailers than farmers because
they deliver product to them on a daily basis. It is up to them to explain, with
some urgency, that they are faced with an irreversible shift in supply patterns
and if their trading terms do not allow them to pay the full price for increasingly
scarce cattle then future supplies will be moved on to the processing companies
that can.”
“Experienced finishers are well aware of the global supply shortages that
are driving the market and the biggest, most serious operators, are determined
to take advantage of this long awaited chance to secure their futures.”
“These are exactly the type of professional suppliers that mainstream slaughterers
prize and they are going to have to be looked after. Consumers and retailers
are going to have to pay more for beef and if they do not producers will be forced
to change their supply routes or leave the industry” Haywood added.
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