A determined effort by supermarkets to dampen down steadily
rising prime cattle prices instead of accommodating the higher
costs faced by their processor suppliers has marked a new battle
line in the fight for beef industry survival.
So says the National Beef Association after noting the temporary
success the multiples have had in holding down market averages
despite the re-opening of export trading on May 3 rd .
“This is a tactic that will backfire on them so retailers
need to realise that they can construct more secure domestic
supply chains if they accept that the resumption of trading with
other EU countries has torn up the rule books and new distribution
patterns are already being established,” warned chief executive,
Robert Forster .
According to the NBA supermarkets can develop long term supply
security for home produced beef most easily if they first of
all send out encouraging price signals that will persuade breeders
to put cows in calf instead of cashing them on the high flying
manufacturing beef market.
And then give their processor suppliers incentives to concentrate
on developing profitable domestic supply chains instead of being
lured overseas by higher paying export customers.
“If they stick to the old rules and keep on squeezing
farmers and processors they will lose out on both, “said
“Processors, some of whom already face severe cash flow
problems, were desperate to create a price plateau because it
was the only way they could break the chain of constantly paying
more for cattle than they are recovering from customers whose
retrospective payments constantly trail price increases when
the market is on the rise.”
“However even slaughterers caught in a supermarket armlock
will not be able to hold down prices for long.”
“This will intensify the struggle between them and their
customers which will either result in the multiples accepting
that UK cattle prices are moving onto a permanently higher, post-export,
price plane – or force more processors to create financial
breathing space for themselves by seeking out export customers
that can keep them in business by paying more for their beef.”
“Current market pressures are both supply and demand
driven and are already irresistible. If the supermarkets do not
accept that the only way they maintain supplies of UK beef is
to pay enough to keep it here they will lose it to higher paying
buyers on the other side of the Channel,” he added.
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