Virus illuminates lack of price transparency within the beef sector
Covid-19’s impact on beef market volatility has brought into focus the lack of price transparency within the supply chain.
Virus illuminates lack of price transparency within beef sector
Plagued by lack of data besides the generic average price and outdated trade and consumer figures, NFU Scotland has called for a fresh look at the problem once the Covid-19 outbreak ends.
Writing to Defra Secretary George Eustice, NFUS president Andrew McCornick summarised the market situation which has seen strong retail sales of beef but falling farmgate prices for beef cattle.
In a pointed attack on the processors he said: “There is huge frustration being expressed by beef farmers right across the country on what is happening to beef prices and this is a direct result of the lack of transparency in the meat industry.
“Transparency is one of the conditions required for a free market to be efficient. The further the animal goes from the farm gate, the less information is made available on price.”
However, Scottish Association of Meat Wholesale executive manager, Martin Morgan, said considerable market information is published regularly by whole industry bodies such as AHDB and Quality Meat Scotland.
He said: “Extensive commercial reporting by organisations such as Kantar also make it clear that prices across the retail sector are under severe pressure.
“In addition to what we are seeing in the UK market, of course, the exact same retail supply chain pressures are being experienced right across the EU and the USA.”
Further uptake of underwritten contracts within the beef industry could help address the lack of price transparency.
These contracts would see farmers receive an agreed-upon price for their cattle rather than being ‘at the mercy of market prices on the day’.
Adam Buitelaar, managing director of the Buitelaar Group, said: “There is no transparency at all in the beef sector and the volatility of beef prices cannot be stood any longer.
“We must have a stable market place.
“Over the past 10 years, Buitelaar has demonstrated underwritten contracts work for the beef industry, processing more than 250,000 cattle, and these contracts afford farmers the tools to think business-mindedly about their enterprise.
“It has become common practise within the poultry and pig sector and would offer some much-needed consistency for beef farmers.”
For pig and poultry producers, the set prices enable farmers to financially forecast and plan ahead, rather than make business decisions on speculative market prices.