Critical year for Scottish meat industry

Critical year for Scottish meat industry

The future strength and development of Scotland’s meat industry is delicately poised as 2014 begins says the Scottish Association of Meat Wholesalers (SAMW).

“The potential for growth and development for our industry is enormous, with strong export opportunities emerging on a regular basis,” said Alan McNaughton, SAMW president. “However, extremely tight livestock supplies and a sharp rise in cattle prices in recent months are having a limiting effect on business development, with the likelihood that similar pressures will carry over into next year.

“There have been many points of progress in the past year but in almost every instance each new gain or opportunity has been accompanied by a risk or a threat which could prevent our industry from fulfilling its potential. For example, securing Scottish Government agreement to an 8% coupled payment for beef calves through CAP Reform, up from the previous 4.5%, was obviously a 2013 highlight achievement. Unless the rest of the CAP package delivers what productive farmers need to commit to beef long term, however, we could still see the new coupled payment advantage being swept away in 2014.

“The whole industry is delicately balanced at present, therefore, with the potential for real advances to be made on one hand, or for producers, on the other, to decide that their combined package of CAP payments doesn’t add up to enough to take them forward. A negative response on this would be a massive disappointment, given the growth of export opportunities which are now available to Scotland’s meat sector. Everything depends, however, on getting sufficient livestock to supply traditional home market outlets, which have long been our industry’s bread and butter, as well as meeting new export opportunities.

“What is already clear is that the current supply/demand/price pattern cannot continue much longer without causing serious damage to our industry. Cattle prices have risen by 15% since the beginning of 2013 while market returns have increased by just 7%. There is no way these two figures add up. Commercial reality dictates that the current high prices cannot last forever without driving processors out of business, and/or driving consumers away from beef. If that happens, then Scotland’s processing capacity will shrink, our meat sector growth potential will decline and we’ll be left watching other countries fill the gaps which have been created.

“Representative bodies in Scotland along the entire supply chain are working hard to achieve a sustainable business model which rewards all of those involved. Nevertheless, having seen beef cow numbers decline by 60,000 since the last CAP reform in 2004, none of us can afford another wrong conclusion.”

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