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    Beef exports will challenge supermarket stranglehold
24/04/06

The lifting of the beef export ban a week on Wednesday (May 3rd) will force mainstream supermarket buyers to radically re-assess discount dominated purchasing policies established after more than a decade of competition-free marketing.

beef cattle

So says the National Beef Association in a strong message to the major multiples in advance of the second beef industry summit in Whitehall which has been called by Lord Bach for May 3rd.

"The surge in demand created by the growing supply deficit in the EU market will very quickly drive UK cattle prices towards Continental levels and the only way the supermarkets can react, if they want to maintain supplies, is to pay more for home produced cattle," explained NBA national chairman, Duff Burrell.

"There will be many long serving buyers employed by multiples who have never lifted their beef price and for some the difficult lessons about to be handed out by the long awaited competition created by post-export market will have to be quickly learned."

"Supermarket strategists will also have to review their deeply embedded, inter-company, price war tactics. If they do not take beef out of this maelstrom then an increasing proportion of domestic production will be sold to more enthusiastic overseas buyers instead - and they will even struggle to secure the volume of beef they require for their top of the range labels."

The NBA is adamant that radical policy revisions are required from the multiples now that UK beef is about to be sold on a fully competitive market.

It points out that the ex-farm Italian prime beef average is 257p deadweight and Italian buyers are already being lined up by domestic traders who are also keen to break the supermarket stranglehold on price and margin.

"On top of that Spanish and Portuguese cattle are leveling out at 235p and the French average is 231p compared with just 200p across the UK," said Mr Burrell.

"The differentials on cow beef are even greater. Even though are own average is approaching a very welcome 140p deadweight standard quality Dutch cows are making 167p and the French average has hit 187p - all of which points to a further substantial lift in cull cow prices once sustained export traffic to these higher priced markets is established."

"In these circumstances it is impossible for the 12 per cent, 15 per cent, even 30 per cent discount between UK prices and those elsewhere in the EU to be maintained."

"We expect the market reaction to be almost immediate - a matter of weeks not months. Open markets do not allow such wide price differences to be persist and it is inevitable that the all-UK cattle average will very quickly assume an all-EU level instead," Mr Burrell added.

link NBA urges members to report illegal retail mixing of beef
link UK Beef Exports start date confirmed
link Opening of beef export markets will break supermarket stranglehold on price

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NBA
National Beef Association