High prices hitting red meat consumption

With turnover in the Scottish red meat industry hitting £2.1 billion mark last year – about 10 per cent above the 2010 level – it might look as if everything was rosy for livestock farmers and meat processing plants, but Stuart Ashworth, the man behind the collation of the figures for Quality Meat Scotland, took a different view.

Speaking on the day of publication of the Scottish Red Meat Industry Profile, he warned: “Remember that increased returns at the farm gate and for the processors do not mean more profit with input costs also rising.”

It is reckoned the red meat business employs some 27,000 people from the farm through to the packhouse, and with its throughput it provides 0.8 per cent of the country’s GDP.

Ashworth had concerns about the trend towards reduced consumption of red meat for the fourth year in succession. Part of this reduction in buying beef and lamb was linked, he thought, to increased prices in a time of wider economic recession.

However, he felt the more worrying part was that consumers were buying more poultry than red meat.

He was also concerned over the continued reduction of cattle, sheep and pigs being kept on Scottish farms with 2.5 per cent fewer suckler cows with 522,000 head, 1.7 per cent fewer breeding ewes (putting the national flock at 2.8 million head) and a 14 per cent drop in the number of sows in the country, bringing a new low of 32,200 sows.

There was a compensating factor in that equation and that was there now seemed to be fewer “passengers” or less productive livestock now on farms and that was a positive situation.

Despite that, he said it was obvious processors faced tight supplies and that was a real challenge for them.

He said: “Tight supplies globally led to strong livestock prices during 2011 and this generated increased confidence in the cattle and sheep sectors.

“However, this confidence failed to materialise into greater stock numbers as producers took high prices as an incentive to cull their least productive breeding animals.”

He said he thought it may be another year before increased confidence from producers was reflected in increased breeding stock populations.

He added: “In the throes of a weak economy generally, the processing sector struggled to pass on the increased cost of sourcing livestock.

“While strong demand for beef and pork facilitated an upwards movement in retail prices during the summer months, consumption fell back towards the end of the year as prices were perceived by many consumers to have reached prohibitive levels.

“For lamb this was true for much of the year as it had already become an expensive protein and so further price increases stifled consumption. Indeed, lamb retail prices grew 21 per cent year on year, having already been viewed expensive relative to other proteins.

“While processors were shielded to some extent by strong overseas demand, helped by a weaker sterling exchange rate … many felt increased pressure on margins, particularly as costs such as energy and distribution rose.

“However, the export trade was buoyant and presented new opportunities to achieve improved carcase balance, while input costs began to ease towards the end of the year.”