Beef market volatility highlights need for better communication

Beef market volatility highlights need for better communication

The movement in cattle prices over recent years highlights the volatility created by a complex international beef market, according to Stuart Ashworth, Quality Meat Scotland’s Head of Economics Services.

Although the farmgate price has fallen 14% in the past six months, it rose by 10% in the first six months of 2013. Similarly, in the first six months of 2010 the beef price fell by 7%, however in the first six months of 2008 the price rose by 24%.

QMS's Stuart Ashworth: Equally challenging for food businesses is managing supply against a retailer’s activity plan which may not recognise the lengthy production process behind the raw material."

QMS’s Stuart Ashworth: Equally challenging for food businesses is managing supply against a retailer’s activity plan which may not recognise the lengthy production process behind the raw material.”

“This volatility, coupled with the backdrop of the long production cycle behind beef production, brings sharply into focus the need for better communication throughout the supply chain, from farm to retail shelf,” observed Mr Ashworth.

This volatility is also reflected on the retail shelves, he added, as illustrated by the market disruptions caused by consumer perceptions of the product during the horsemeat scandal. Weather, too, is an example of an uncertainty which can have a substantial impact on demand with sunshine bringing out the barbeques and driving demand while rain doesn’t.

“Equally challenging for food businesses is managing supply against a retailer’s activity plan which may not recognise the lengthy production process behind the raw material.  These elements play on the market price in the short term but over an extended period supply and demand balances play a greater part,” stated Mr Ashworth.

“The challenge for the whole industry is that increased retail prices have over the past 12 months led to reduced consumption of fresh beef cuts.

“The latest information from market research company Kantar suggests that the volume of beef retail cuts sold has fallen by 5% over the past year but the volume of cheaper cuts for example has fallen more slowly than the more expensive cuts.”

However, with the UK economy reported to be on the upturn, opportunities will emerge to once again grow sales of high provenance high quality Scotch Beef PGI to consumers.

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