Beef processors struggle as demand for high value products fall

The reduction in demand for these cuts along with hides and fifth quarter material due has been described as a “worry for the entire supply chain​” the Scottish Association of Meat Wholesalers (SAMW) has revealed. 

It said that 15% of pre-Covid sales outlets for beef had ‘vanished’ due to the closure of hotels, restaurants catering and events.  Last week, concern was raised by the industry about the impact of the foodservice closures​ on farmers and the wider meat and dairy markets. 

SAMW revealed that most its member companies’ cold stores were almost completely full with traditional high-value cuts that cannot find a buyer. 

Margin​

“As a result, far from a making huge profits at present, as some have suggested, many processors are struggling to make any sort of a margin at all,” ​said Martin Morgan, executive manager of the SAMW. 

“Many of our members’ plants are now operating to a reduced schedule with one business manager reporting that he’s cut the weekly throughout of cattle by 30% since the Covid-19 lockdown began.”​

He said that the latest market information published by Quality Meat Scotland and AHDB, alongside commercial reporting by organisations such as Kantar are highlighting the issue of pricing across the retail sector. 
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“For example, AHDB’s latest beef tracker report shows the price of roasting joints sitting at £8.90/kg, for the week to April 18, compared to £9.45/kg at the end of​March. The sector has at least recovered from the £7.17/kg low reached during the week to April 11,”​ he said. 

Decline in value​ 

“Even cuts that are in high demand such as standard mince and diced beef, which are boosted by home cooking demand, have declined in value by 5% since the end of March, with standard mince settling at £4.04/kg.” ​

He said that the loss of the high value products would not be met with the retail price of mince. 

 Hybu Cig Cymru - Meat Promotion Wales argued the closure of foodservice has produced a destabilising effect on the market prices for both lamb and beef. 

John Richards, industry development and relations manager at HCC,  said: “Throughput figures for March showed that there was an increase in the volume of beef processed to meet retail demand. The clear issue is while there has been increased demand from retail it will not be for the same cuts and products as would have been seen from foodservice.​

“Some product has been diverted from foodservice to the retail sector but processors may also decide to put some of the higher value product into storage by freezing. The loss of foodservice business is causing a major imbalance in the market.” ​

“These are the stark realities for the entire Scottish red meat supply chain as the country embarks on another week of Covid-19 lockdown,"​ he said. 

Earlier this month, the meat industry response​ to the Coronavirus pandemic received praise from the Food Standards Agency.