NBA issues warning on beef supply chain

Tighter supplies at world, EU and UK levels will continue to support domestic slaughter cattle prices and this means retailers must adopt a new approach and secure their supply chains by paying processors much more for beef than they do at present.

The National Beef Association is certain that new international and domestic beef supply pressures mean it is no longer sensible, or realistic, for slaughterers to force down ex-farm prices as soon as they think more finished stock might be coming forward.

And that current value fixing tactics in which retailers consistently sell beef for less than the cost of production, and leave farmers and processors to operate with no profit margins, will have to be abandoned as outdated if the beef sector is to move forward and enjoy the benefits of an ongoing, farm-to-plate supply chain that works.

"The time has come for a complete re-think. Coupled subsidies disappeared more than three years ago, world food supplies are getting shorter by the day, and both retailers and processors can no longer afford to risk future supplies by consistently under-pricing their producers' cattle," warned NBA director, Kim Haywood.

"The traditional response of abattoirs, faced with an uncomfortable period of unexpectedly high cattle prices, has been to bear the loss stoically but be alert for the earliest possible opportunity to force down the market and recoup their margins - which usually means as soon as they get a sniff that more animals might be on offer."

"But what they have to do now is change tactics because it is they, not the feeder, who is going to be squeezed, unless they react by making sure that retailers understand they must pay more for deliveries and allow their suppliers to cover the cost of increasingly expensive cattle and enjoy a sensible net margin too."

She added: "Processors are in more direct contact with retailers than farmers because they deliver product to them on a daily basis. It is up to them to explain, with some urgency, that they are faced with an irreversible shift in supply patterns and if their trading terms do not allow them to pay the full price for increasingly scarce cattle, then future supplies will be moved on to the processing companies that can."

"Experienced finishers are well aware of the global supply shortages that are driving the market and the biggest, most serious operators, are determined to take advantage of this long-awaited chance to secure their futures."

"These are exactly the types of professional suppliers that mainstream slaughterers prize and they are going to have to be looked after. Consumers and retailers are going to have to pay more for beef and, if they do not, producers will be forced to change their supply routes or leave the industry."

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