Consumers could stop buying beef and lamb unless hard-pressed domestic producers start getting better prices from supermarkets, according to research.
A lack of sustainable farm gate prices could lead to consumer dissatisfaction and a decline in consumption, according to a report commissioned by the English Beef and Lamb Executive (EBLEX).
Price volatility since production subsidies for English farmers were ended under reform of the EU’s Common Agricultural Policy (CAP) could increase consumer dissatisfaction, says the report produced for EBLEX by consultancy Promar International.
There are signs that the retail sector has started to respond to the dire problems of UK red meat producers. At a recent English Farming and Food Partnerships conference in London, Morrison’s chief executive Marc Bolland announced the supermarket would be immediately sourcing 100% British fresh lamb in all of its stores.
The news was welcomed by EBLEX chief executive Richard Ali: “Marc’s announcement is extremely welcome news and that is when corporate social responsibility becomes a commercial reality. Morrison’s announcement is extremely positive because even at the heart of the lamb crisis, in which we are, there’s a significant amount of New Zealand lamb sitting on shelf and that’s a real problem.”
Waitrose md Mark Price said: “Many farmers are at a cross-roads with livestock farmers considering switching to arable and biofuels.” Although Waitrose has only a 4% UK supermarket market share, it works closely with its suppliers and pays 20% above market price for lamb “because we want lamb producers to survive in the market”. Price added: “We understand the true costs of production which is why we pay the prices we pay.”
However, there is widespread concern that some other big retailers have failed to respond to the crisis. One beef producer said: “I do not understand why supermarkets will not pay a price for beef that will ensure the long term survival of the beef producer.”
While the Promar research notes there has always been a group of loyal consumers of home produced beef and lamb, increasing concerns about the environment and climate change are now driving demand for more locally produced food.
EBLEX has as its two main objectives business improvement in English beef and lamb production and product differentiation based on the quality standard mark to create demand for products. Successful product differentiation is seen as not only providing opportunities for growth, but can also provide a degree of protection from volatile prices.
“It is clear that the most successful businesses have a number of strategies to manage volatility and provide their customers with the products and services they want,” said EBLEX chairman John Cross. “However it is time our largest supply chains fully made the transition to the post-CAP world by looking to deliver truly sustainable farm gate prices. Not only does it make sound business sense, it makes sense for our landscape, our society and our consumers.”
EBLEX will be publishing its fifth annual edition of Business Pointers farm costings data later this month. This data examines the profitability of beef and sheep enterprises in England during the year to the end of March 31 2007.