Falling beef prices are damaging producer confidence and undermining the sustainability of UK beef production.

That was the warning from the NFU after EBLEX figures revealed that the gap between farmgate and retail beef prices widened between April and May, with producers receiving almost 47% of the final retail price last month.

While the average retail price was at similar levels to a year ago, the farm price had dropped around 20p per kilo, which led to an actual price spread of 300p.

“If processors and retailers are serious about protecting the future viability of the UK beef industry then they need to address the present situation,” NFU livestock board chairman Alistair Mackintosh said.

“Figures show that demand for beef has remained relatively robust over the previous year even though it’s being driven by promotions. I believe that there is scope to re-balance returns from the carcass and more return could then be made from mince, making the higher value cuts more price-competitive,” he said.

“The supply chain must recognise the imbalance this present situation could lead to if it is not resolved.”

But producers must also understand the market conditions too, he added.

“We have seen supply increase slightly due to a combination of factors such as increased levels of dairy beef, an unfavourable spring, higher carcass weights and seasonality. Farmers need to recognise the effect that the oversupply situation has on the beef price and tailor their marketing strategy to maximise their returns.”