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Covid-19 exposes meat supply chain failures

Retailers’ decisions to stock foreign beef at a time when British prime cuts are in desperate need of a market have angered the farming industry. But what is the effect on farmgate prices? Hannah Binns and Mollie Leach investigate.

 

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Covid-19 exposes meat supply chain failures

Moves by major retailers to stock Irish and Polish beef have been described as a ‘kick in the teeth’ to farmers already battling with falling prices as a result of the coronavirus pandemic and its impact on carcase imbalance.

 

The UK prime cattle average fell by 8p/kg in the week ending April 17 and analysts predicted both prime deadweight and cull cow prices would face further pressure in the months ahead.

 

NFU chief livestock adviser John Royle said it meant ‘already unsustainable returns would be eroded further’ placing many ‘beef suckler finishers and dairy herds under severe hardship’.


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Sainsbury’s, Asda and Tesco were all in the firing line, with Tenant Farmers Association chief executive George Dunn calling for the Government to step in.

 

“Retailers have been handed the monopoly on delivering food to consumers and need to act responsibly in the supply chain,” he said.

 

“Defra should be holding the feet of the retailers to the fire having given them relaxed competition rules.”

 

Sourcing policy

 

Despite social media being awash with images of supermarket shelves dominated with Irish beef, the retailers said the proportion of imports was within their sourcing policies.

 

The move came just weeks after major beef processor ABP Food Group supplied 400 tonnes of Polish beef to Sainsbury’s and Asda.

 

Visible

 

But Stuart Ashworth, director of economic services at Quality Meat Scotland (QMS), highlighted the produce being seen on shelves was ‘unlikely’ to be a result of increased foreign imported beef volumes.

 

Pointing to the closure of the food service sector, which typically bought higher value cuts of meat, he said: “It is much more likely the produce has been redirected from food service into alternative markets, such as retail, so adhering to legal labelling legislation has made it much more visible.”

 

HMRC monthly trade figures published by AHDB demonstrated beef imports from Poland were up a third on last year, but overall beef imports during the year were down by 12.8 per cent.

 

Irish beef

 

British producers have also been acutely aware of the glut of Irish beef which was left without a home when the food service market closed overnight.

 

Now, with the extension of the Irish Government’s Temporary Covid-19 Wage Subsidy Scheme allowing the furlough of abattoir workers and reducing operational costs by 70-85 per cent, Irish beef could be a commercially attractive proposition to the supermarket giants.

 

Prices

 

Norman Bagley, head of policy at the Association of Independent Meat Suppliers, said: “While it is disappointing for British farmers to see Irish beef on supermarket shelves when plenty of domestic product is available, it is a commercial decision made by the retailers in accordance with their sourcing policies and it is reassuring it is being offered at comparable prices to British produce.

 

“It will be interesting to see how much Irish beef enters the UK in the coming weeks and whether some Irish processors use the competitive advantage given to them by their government in heavily subsidising workers’ wages to undermine the domestic UK market.

 

“A major input of much cheaper beef would have serious implications for producer prices here, however there has been no indication of this approach yet.”

Retailers reminded of their responsibility

Farming unions have written to the major retailers to remind them of their ‘social responsibility’ to provide a route to market for domestic produce.

 

Last week, Morrisons openly addressed the carcase imbalance issue by opening ‘barbecue bars’ to promote higher value cuts of British beef.

 

Richard Findlay, NFU livestock board chairman, said: “Coordinated efforts by the likes of Morrisons, which has worked hard to promote British cuts of meat to consumers, clearly demonstrates how the whole carcase can be balanced through the help of these supermarket giants. It is disappointing more retailers do not aspire to do the same.”

GREATER TRANSPARENCY NEEDED

With the UK beef market plagued by a lack of data besides the generic average price, the lack of visibility producers have about market drivers and the risk it carries with businesses structured around little information have been highlighted.

 

Industry bosses have raised concerns this could be exacerbated by out-dated trade and consumer data.

 

NFU Scotland has written to the UK Government on the need for greater transparency in the beef sector, particularly emphasising the need for clarity on the wholesale value of every part of the carcase, stating fairness without profiteering in the beef chain must be prioritised.

 

Insight

 

John Royle, NFU chief livestock adviser, said: “Market monitoring needs to ensure clear insight into which components are traded frequently in and out of the UK, how UK and Irish produce is balanced on the UK market, how values change over time, and the impact on the whole animal price paid to the farmer.”

Polish imports - how the numbers stack up

  • During February, 1,343 tonnes of Polish beef were imported, making it the second largest supplier after Ireland and up 33.3 per cent on February 2019. This was against the backdrop of an overall decline in beef imports of 11.9 per cent on the year.
  • In the first two months of 2020, 2,521t of Polish beef was imported into the UK, up 5.3 per cent on the same period last year.

Higher

  • February imports of Polish beef were running at 1.8 per cent higher when calculated on a daily basis than in March last year.
  • However, the UK’s beef imports from Poland were down 10.9 per cent to 15,283t during the whole of 2019.
  • Total imports last year were down 12.8, with just 4.4 per cent of the 252,800 imported total from non-EU suppliers, including 3,006t imported from Brazil.
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