Time to take action on beef crisis

But what was a surprise was the total lack of any clarity from NFU Scotland president, Andrew McCornick, about any outcomes likely to help the beef sector at this perilous time.

Wittering on about quality assurance; the value of the Scotch PGI; looking for new markets; clearer labelling and increased public procurement of Scotch beef are all very interesting and laudable, but in no way, shape or form get anywhere close to solving the current problems in the beef sector. And mixing this up with a 'greetin’ meeting' about Brexit is, frankly, naïve and just bloody stupid.

Having spent a lot of time in Westminster since Christmas on the Bew Panel, it’s been clear, at least to me, that Brexit will happen and I’ve thought since late February/March that a ‘no deal” Brexit will be the likely outcome. You can try and fight it like NFUS – which is futile – or you can embrace it and get the best deal possible for farming interests across the UK, especially livestock farming and specialist producers like potato growers.

But that fight is only just beginning. The plight of beef finishers should have been a top priority two or three months ago and needs urgent action right now, not the 'woe is me' waffle we’ve heard so far.

To lobby successfully for change or action, you first need the facts. I asked for detailed information on the losses in the beef sector across the four devolved administrations as evidence for the Bew Panel. That information is in the public domain, having been provided by AHDB, QMS and LCC.

These independent, verifiable figures show the true extent of the losses, broken down into steers, heifers, young bulls and cows with carcass weights year on year. From January to June, 2019, they show a loss of £65m across the UK for clean cattle. Scotland’s share of the loss in that six month period is £15m.

We used January to June, 2019, because that coincided with the period of the Bew review, but the losses started in November, 2018 and are continuing, so are likely to be in excess of £100m by now. However, now that we have a rigorous, tested template to work from, any period can be analysed to provide hard facts to lobby with, not individual farmer’s losses per head which prove nothing, no matter how worrying for the individuals.

So, fact number one: producer losses are huge and they are quantifiable. So what about our customers, what are consumers paying for their beef products? Well, for the four weeks to mid-July, 2019, the average retail price of beef in GB across a standard range of products (that Kantar have measured since I can remember), was £7.84/kg.

That is a like-for-like fall of 2.5% over the same period last year. The GB prime average price in the same period to mid-July is down 11%. So the producer price is 42% of the GB retail price or 90% of the long-term average. Of course, it should and needs to be 50-55% of the retail price to give finishers any kind of margin and future!

So, facts number two and three: beef is worth marginally less in the shops and a hell of a lot less to producers. No surprise, of course, as every finisher knows, because a drop of 11% represents £100 to £150 on an average finished beast on most farms.

Next, supply. Imports of frozen beef were up marginally in 2018 and early 2019, probably because of that failed Brexit date of March 29, which led to stock piling. Although that pressure has now receded in the UK , there is still a lot of manufacturing beef in Europe, with cold stores still too full thanks to Theresa May’s dithering. With cow slaughterings still quite high, supply continues to outstrip demand for mince, if you add back the frozen stocks.

However, there is no evidence of any noticeable increase in fresh imports. There was a 2.2% increase in UK beef production (across all categories) in 2018 but with the exception of cow slaughterings, which were running at a 20-year high in the first half of 2019, there doesn’t appear to be any over supply issue in the UK. In fact, total beef production in the UK is forecast to be down 3% in 2019.

So, fact number four: It’s not an over supply of beef from UK farmers, or import volumes that is causing the price issue for UK finishers and export volumes are marginally improved.

That leaves 'demand' and the much-publicised demise of beef sales due to the rise of veganism and the total bollocks being talked by environmental lobby groups about cattle’s contribution to climate change. Retail sales of beef have fallen 2.2% in the 12-month to mid-July, but only fell 1.8% from January, 2019, so, an improving picture. Spending on beef at GB level has increased 1.4% year on year.

Sales of burgers and grilling cuts are down this summer as the BBQ demand hasn’t been as good as last year’s scorching summer. So, the balance of sales has changed, with other cuts, notably stewing beef and roasts, faring much better. Food service demand is down 6.8% with pubs and restaurants struggling, but that is a general trend, not one peculiar to beef.

Fact five: Demand isn’t the issue which some with a vested interest are keen to promote, despite the best efforts of the BBC. Seasonal demand for some products is challenging – but isn’t it always?

Once the facts, (and there are many more besides), are clear and these are all publicly available –there is a much better chance of putting together a plan to sort this mess out. Supply isn’t the issue, but there are things to be done with demand. We need food service providers and retailers to push and promote beef to clear any manufacturing beef backlog. As 60% of most beef carcases are sold as mince, then this is the area that underpins the whole trade. So a plan to talk to and lobby influential retailers and food service providers is needed immediately.

They need a clear, simple message underpinned by facts about where their supply might not come from in the near future if producer prices don’t improve, but also outlining the opportunity to promote mince and other beef products to their advantage. That's just not happening right now.

With consumers only paying 2.5% less for beef products than a year ago and finishers receiving 11% less, where is the margin going? It can only be two places – the abattoirs or the retailers. It’s the ‘elephant in the room’ at cosy wee get-togethers like the NFUS organised last week.

How can you sit chatting with the very people who are stripping margin out of your members’ pockets and pretend it’s not happening? And if it’s not meat factories, then it must be those who sell to consumers. So, we need to get to the bottom of which one of these two groups is coining it in at the expense of the finishers.

The Irish farmers clearly think it’s the meat factories as they picketed them last week and I’m bound to say my instincts tell me they are right. That’s not to say when Tesco, McDonalds, et al get to see how much their suppliers are making they won’t demand a share – of course they will and so would I in their shoes.

Either way, both groups need targeted to explain themselves or we should consider following the Irish to factories and food distribution centres (RDCs) – that’s something for NFUS to consider and organise instead of friendly photo calls and waffly press releases. It’s happened before, I seem to remember, as , in the words of Max Boyce: “I know ‘cos I was there!’.

Finally, the 80/20 rule applies in Scotland to beef finishers – 80% of the cattle are supplied by 20% of finishers. So I’ll hire the room and those 20% are all invited to attend. Not another greetin’ meeting, but an opportunity to get together and fight back against the dominance of meat factories, particularly Irish meat factories who are strangling our industry.

It is perfectly legal to manage supplies to these factories and boy, does it need to happen and quick. Individual finishers obviously negotiate their own prices and terms with the factories of their choice, but with this group we could manage supplies.

That way, finishers have a chance of controlling their own destiny rather than being the victims they have become. Factories starved of throughput can’t exploit finishers.

Think about it. A small organisation looking after beef supplies and providing information to its’ professional finishers to help with planning so they can’t be exploited by the factories.

The alternative, frankly, is unthinkable and the response of our main lobby organisation NFUS to this disaster has so far been pathetic – so what’s to lose?