‘Scotch premium’ for beef takes hit in processing sector

Increased supply and bottlenecks in the processing sector have contributed to the recent loss of the “Scotch premium” for beef, which traditionally saw prices for cattle born and bred in Scotland stand higher than those in the rest of the UK, it has been claimed.

With prices for cattle in the north of England currently outstripping those achieved on this side of the border on a regular basis, Quality Meat Scotland (QMS) senior economist, Iain Macdonald, said that the BCMS cattle population data pointed to one of the causes,

“In October 2021, the figures signalled a sharp increase in prime cattle supply on Scottish farms, with a 5.4 per cent lift at 18-30-months compared to October 2020. By contrast, numbers were down by 1.3 per cent across England and Wales.

“It is possible that this imbalance has been generating downwards pressure on the relative price of cattle in Scotland,” said Macdonald.

“Scotland’s beef processing sector has been facing considerable labour shortages, restricting its ability to handle the available supply of cattle and potentially weakening competition for these animals.”

Advertisement

Hide Ad

He said that this challenge was a reflection of the lack of suitably skilled workers, with UK immigration rules making it harder to recruit from overseas since EU exit, at a time when domestic workers had been favouring careers in other sectors such as warehousing for online retail.

“Furthermore, persistently high Covid case rates in the community and isolation requirements have added to the pressures.”

While the situation had obvious echoes in the pig sector, where the backlog of pigs on farms had created havoc within the market, Macdonald said there had also been parallels in the beef sector in the US.

“A similar scenario played out at the beginning of the pandemic in the USA, where limited slaughter capacity resulted in a backlog of cattle, pressuring finished cattle prices at a time of heightened retail demand and surging wholesale beef prices.”

Advertisement

Hide Ad

Backing this argument up, he pointed out that despite the expectation of higher availability on Scottish farms this winter, latest Defra statistics suggested there had been a year-on-year decline of nearly 7 per cent in the number of prime cattle slaughtered in the final quarter of 2021.

He added that at abattoirs in England and Wales there had been a year-on-year decline of 10 per cent in prime cattle kill between October and January – a figure which was much steeper than that indicated by the population figures from October – which suggested that that cattle could be starting to back-up there too.

However, Macdonald said that the regional supply part of the equation could change the market dynamics as 2022 progressed, with supplies likely to increase by around 2.5 per cent in England while the number of Scottish animals looked set to fall.

Irish producers have, however, seen their trade ‘on fire’, approaching €5/kg, with market commentators in the country indicating that the UK-wide shortfall in the ability to process cattle was adding to already globally high prices.

 0 comments

Want to join the conversation? Please or to comment on this article.