Abattoirs and processors struggling to pass on rising costs, says QMS
According to Quality Meat Scotland (QMS) chief economist, Stuart Ashworth, the ability of abattoirs and processors to pass farmgate price increases onto buyers and consumers remains challenging.
Prime cattle are now trading 8-9% above levels recorded a year prior, with whole prime lamb prices around 25% higher than a year ago. Despite these increases in farmgate prices, data from the Office for National Statistics (ONS) suggests that there hasn’t been a significant knock-on increase to retail prices.
Ashworth explained: “According to the ONS, overall retail beef prices are little changed on a year ago but up 2% since the start of the year. Retail prices for lamb have climbed a little quicker, up around 4% on the year, while pork moved upwards by 1.4%.”
ONS data further suggests that retail sales for most meat categories continue to show increases from 2019.
Retail and catering demand can impact farmgate prices, but they can also be affected by staff shortages in abattoirs and oversupply of animals for the capacity at which they can currently operate. This situation is being faced by British pig processors in particular, Ashworth said and is a contributing factor to the current slide in farmgate pig prices. The prime pig price is currently 6% lower than a year ago.
Ashworth added that the differences in scale between movements in farmgate, wholesale and retail prices “reminds us of two things. Firstly, that the balance of cuts demanded from our processors can change quickly and play a big part in the value of the whole carcase. Secondly, how challenging it is for abattoirs and processors to push through their cost increases to their buyers and ultimately consumers.”