Covid-19 brings red meat sector turbulence

To meet the growing consumer demand for mince, the sector could convert slower selling higher value cuts into mince or source an alternative source, as seen last week (April 5), with ABP supplying 400 tonnes of Polish beef into Asda and Sainsbury’s.

Yet retail sales of mince, diced and stewing cuts are less profitable for farmers, with mince making up about 20 per cent of the prime carcase value.

With the closure of food service, which typically purchased higher value cuts, and self-isolation driving home preparation, cooking and consumption of meat, the industry has been quick to voice its concern about the impending carcase imbalance producers could face.

’Carcase imbalance’

The NFU, alongside British Meat Processors Association (BMPA) and Quality Meat Scotland (QMS) have called on the retail giants to help balance the supply chain through special offers on different meat cuts.

Richard Findlay, NFU chief livestock adviser, said: “It is really important supermarkets promote high value cuts of meat, such as steaks, to help address the carcase balance situation and avoid too much of a beef price drop in the coming weeks.

“I am pleased some of the retailers have already started promotional offers in time for Easter.”

Nick Allen, BMPA chief executive, said: “Without sales of other parts of the carcase, including hides, skins and byproducts, the market for which has also collapsed, to balance out cheaper mince sales, the pricing model for meat processors stops working.

“While processors can absorb this distorted market demand and price shocks up to a point, it will be impossible to shield producers from a lowering of farmgate prices using mechanisms in the food supply chain alone.

“Retailers could help by buying a range of cuts and bring that wider choice to consumers through promotions.”

Stuart Ashworth, QMS director of economics services, said: “The closure of the hospitality sector and schools has significantly displaced the market and changed the balance of meat cuts required.

“Roasts and steaks are popular when eating out, but they may be less popular in the home environment, particularly when the extended family cannot meet up for a family meal.

“With many consumers having no or reduced income in the short-term, this will severely affect what they can afford to buy.

“While some who are working from home and cannot eat out may buy more premium cuts from retail shops, many who are not in work and have multiple extra meals to provide may buy more economy cuts.

“For processors, this means the carcase balance will change and the revenue they earn for the whole carcase may diminish.”

Irish beef

An oversupply of beef in Ireland, which exports more than 90 per cent of its beef production, has led to a fall in the Irish beef price of about 15-20 euro cents/kg (13-18p/kg).

Mr Findlay said: “With 60 per cent of Irish beef floating around in the market without a home, the produce could be commercially attractive to UK processors and retailers, which in turn could pose a risk to our domestic beef market.

“Any significant fall in the beef price could adversely impact on the 25,759 English and 8,238 Welsh beef producers.”