Red meat supply chain under pressure from Christmas demand
According to the latest market commentary from Quality Meat Scotland (QMS), seasonal supply of livestock is expected to rise in the final quarter, but the current labour shortages remain a concern.
Iain Macdonald, senior economist analyst with QMS, said that labour shortages in processing businesses are of “particular concern” given that the seasonal supply of livestock usually rises in the final quarter of the year to meet increased red meat demand over the winter. McDonald added that there are also concerns around shortages of drivers to transport livestock and meat around the country.
QMS said that data from Scottish auction marts for the past five years points to a lift of roughly 10% in prime lamb marketings between September and the three-week pre-Christmas peak in Scotland, and by around 20% in England and Wales.
According to the same data, in Scottish abattoirs, prime cattle slaughter averaged around 10% higher at its three-week pre-Christmas peak than in September over the past five years. QMS reported that the peak for cattle tends to begin earlier than for lambs, closer to mid-November due to the longer maturation period.
“Pressure on the price of livestock”
Macdonald noted that a backlog of slaughter-ready livestock has a knock-on effect. He said: “As we have seen in the USA during the pandemic, and in the pig sector in Britain, a surplus of livestock over and above the operational capacity of the processing sector can lead to a backlog of slaughter-ready animals on farm, pressuring the price paid for them, irrespective of the level of consumer demand.”
In addition to labour, QMS said that components and parts have also been of concern in the processing sector, with pent-up demand and backlogs at ports across the world leading to rising goods and raw material costs. These pressures have been compounded in September by a fall in sterling against the US dollar.
While pig prices are now sliding sharply, rising carcase weights have at least held overall carcase value 8% above the five-year average, while per kilo prices are holding slightly above their five-year average.
McDonald added: “One part of the sector to see limited price pressure so far is retail. Latest data from Kantar for the 12 weeks to early September points to fresh beef and fresh pork averaging 1-2% cheaper than a year earlier across GB, although lamb did average 4% more expensive.”