Even although the price of beef cattle has dropped in the past week, processors have faced having to pay record high sums of cash for stock and this has constricted opportunities in the market, according to the Scottish Association of Meat Wholesalers (SAMW).
Alan McNaughton, president of the organisation whose membership covers almost all the red meat processing sector in Scotland, said this week: “Extremely tight livestock supplies and a sharp rise in cattle prices in recent months are having a limiting effect on business development, with the likelihood that similar pressures will carry over into next year.”
These pressures came at the same time as the potential for growth and development for our industry was enormous, with strong export opportunities emerging on a regular basis, he added.
The net result was a finely poised future for the industry.
“There have been many points of progress in the past year but in almost every instance each new gain or opportunity has been accompanied by a risk or a threat which could prevent our industry from fulfilling its potential,” he said.
One example of this was the plus of getting 8 per cent of the next common agricultural policy (CAP) budget secured for beef calf production while the rest of the same budget had the capability of sweeping away any such advantage. “The whole industry is delicately balanced at present, therefore,” he added, “with the potential for real advances to be made on one hand, or for producers, on the other, to decide that their combined package of CAP payments doesn’t add up to enough to take them forward.”
McNaughton claimed the current supply/demand/price pattern could not continue much longer without causing serious damage to the industry. “Cattle prices have risen by 15 per cent since the beginning of 2013 while market returns have increased by just 7 per cent. There is no way these two figures add up,” he said.
“Commercial reality dictates that the current high prices cannot last forever without driving processors out of business, and/or driving consumers away from beef. If that happens, then Scotland’s processing capacity will shrink, our meat sector growth potential will decline and we’ll be left watching other countries fill the gaps which have been created.”
McNaughton then fired a broadside at the level of bureaucracy and red tape in the industry saying that while there had been progress in the past year there still seemed to be a mountain to climb in relation to far too many points.
“Prime examples of this include the torturous process we’ve been faced with during the implementation of new animal movement regulations and the introduction of new certificates of animal welfare competence for plant workers.”