Vion’s demise has hit right across red meat sector

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The past year has been a difficult one for Quality Meat Scotland (QMS), the Scottish red meat promotional body, after the loss of Vion’s major pig processing plant and the closure of slaughtering facilities.

These prompted QMS chairman Jim McLaren to point to what he described as the emergence of a very concerning gap between the true value of beef and the retail prices currently being asked.

Speaking yesterday in Perth at the annual review of QMS’s work in the past 12 months, McLaren said this gap was a very real threat to the future viability of the whole red meat sector.

He and QMS chief executive Uel Morton have recently met a number of Scottish red meat processors and each of them had voiced concerns about the situation they find themselves in.

“If we look at how prices have moved for cattle and beef over the past 20 years, it is very clear that the retail price of beef has lagged behind most other meats and proteins and, until recently, all other foods,” said McLaren.

He pointed the finger at retailers when asked where the solution to the present problem lay, saying that those who were selling beef had a real opportunity to address the current disparity and move towards more realistic prices.

“Such a move would be a welcome indication of retailers’ recognition of the spiralling costs faced by processors, who have also seen significant increases in labour, energy and distribution costs,” he said.

QMS believed that the horsemeat scandal provided a wonderful opportunity for retailers to increase their prices.

Morton said retailers had reacted positively to the increased demand for home-produced meat following that debacle. “The door is open for retail prices to increase as a reflection of the dynamics of the changed supply position,” he said.

He added that a price lift for beef in the shops would feed right back to processors and allow them to invest in the future.

Looking at the long-term wider picture for the beef industry, QMS said the tightening in the supply of cattle right across Europe and other beef producing parts of the world would mean any increase in prices would be sustained.

The importance of retaining a critical mass of livestock in Scotland emerged from the annual financial figures for QMS, with 
a drop in levy income in the year to March 2013 falling to £4.43 million from £4.84m the previous year.

Part of the fall in income was due to the 2012 lamb crop not finishing as early as they would in a normal year following the cold wet season, but the other part was the loss of pig levy income following the closure of the Vion processing plant in West Lothian last year.

The net result was a negative figure of £270,989 on the organisation’s £7m-plus turnover. Morton said the QMS board had anticipated this loss as soon as the Vion plant closure was threatened.

Looking forward, he said that QMS had budgeted for a break-even position in the current year.

With regard to the loss of levies on livestock processed in England and Wales, which he estimated was around £1.4m, Morton said that there had been no progress on a proposal by the UK government to sit around the table to discuss the issue.