Beef and lamb men take lions share of BSE burden

06 March 1998

Beef and lamb men take lions share of BSE burden

By Jonathan Riley

BEEF and lamb producers have borne the brunt of the extra costs caused by the BSE crisis while other sectors in the industry have sustained margins, according to the Meat and Livestock Commission.

Giving evidence to the parliamentary Welsh Affairs Committee as part of its investigation into the current crisis in the livestock industry, MLC corporate strategy director Bob Bansback said there was a growing gap between retail prices and those paid to producers.

He said in December 1995, beef producers received 223.8p/kg deadweight while retailers charged customers 403.2p/kg – a difference of 179.4p/kg. But as beef prices fell, the difference between retail and farm-gate price widened. And a year later the gap had risen by 4% to 189.3p/kg. By December 1997, the price difference was 202.8p/kg – a 10% increase spread over two years.

For lamb, the difference between farm and retail price was even greater, with a 17% increase in the price gap over the same period.

Margins at wholesale level had also been maintained according to the MLC. But while Mr Bansback said he would have liked to see more of the costs absorbed at other points in the production chain, he did not accuse the abattoirs, processors or retailers of profiteering.

While some of the extra BSE-related costs shouldered by industry were inevitably being passed down the chain to producers, he insisted imports of cheaper meat, and the strong £ were also contributing to poor returns.

MLC figures revealed that beef imports had increased by about 6% in the past year to 200,000t from countries as diverse as Botswana at prices up to 20% cheaper than the British product.

Also giving evidence to the committee, Marks & Spencer bosses insisted the firm had absorbed extra costs related to the beef crisis. Technical manager Chris Gilbert-Wood said the firms margins on beef had fallen, though he would not divulge the figures.

Speaking to FW before meeting the MPs, M&S beef specialist Chris Brown urged producers to improve their knowledge of the production chain.

“Farmers dont understand the beef production chain, they buy animals to keep, without thinking about the market they are trying to achieve.”

“Its no surprise that they are taking more of the costs because any price received depends on who the price makers and price takers are in an industry. Farmers are the price takers and its inevitable that costs will be passed down to them,” he said.