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Opinion - Playing games with deadweight specifications hurts everyone

livestockPricesPrices & trends

Andrew Loftus, Director of Sellmylivestock.co.uk and a member of the NFU national livestock board

 

Perhaps farmers are not best placed to determine the ideal weight and spec of a beef carcase. They are just too far removed from final consumer.


We might reasonably expect the procurement teams of large processors to understand customer demands better. We might therefore be inclined to take their claims that changes in weight/spec are made in ‘response to consumer demand’ at face value. But should we?


Over the past year changes in payment terms are estimated to have taken £1 million/month out of UK beef market (AHDB study, July 2016). We have also seen further reductions in maximum carcase weights.

 

This tightening of specifications amounts to a ‘double-­whammy’ for farmers as base prices for R4L steers dropped 28p/kg over the same period.


So is this tightening of specifications really in response to consumer demand or is it simply opportunistic?


We will know the truth soon enough. As beef prices firm up post-Brexit (Irish imports being more expensive), my bet is we will see specifications relaxed once more.

 

It is an inevitable cycle which is deeply damaging to the British beef industry – as prices rise, the goalposts get wider; as they fall, we are told consumers instantly demand more consistency.


This does nobody in our industry any good. Consumers are put off by inconsistent product, retailer sales suffer and farmers find themselves penalised for animals which are now ‘out of spec’.

 

I am not even sure processors enjoy this game playing as much as cynical farmers might suspect, often they are simply forced to react to competitor behaviour and everyone is dragged down to the lowest common denominator.


In February 2015 the British Meat Processors Association and NFU launched a voluntary code of practice governing the purchase of cattle, signed by most major processors.

 

Among other things it stipulates three months’ clear notice must be given for all specification changes.


While there is much which can be done to build on this code, and the notice period should be such that farmers might reasonably have time to adapt, it was an important step forward for the industry.


The NFU is rightly calling for this voluntary code to be brought within the remit of the Groceries Code Adjudicator. This would make it fully enforceable and applicable even to those who refused to sign the voluntary code.


My belief is that only then will we see the end of this value destroying specification seesaw which serves nobody’s best interests.

 

Farmers Guardian
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