A recovery in prime cattle and barren cow prices this week suggests that abattoirs over-estimated the availability of beef during the summer months, according to the National Beef Association.
It claims that a 5-10p/kg dw price lift expected across most outlets this week shows that the “huge price plunge” imposed on finishers since the beginning of July was “overdone and unnecessary”.
But for steers in the Southern region, the drop has been greater, falling from an average 273p/kg to 256p/kg in the past five weeks – down 6.2%.
“The £60 a head drop in sales income from Southern England’s prime cattle, and the £136 a head national fall in barren cow values, recorded over the past five weeks is now being shown to have been hugely overcooked,” explained the NBA’s director, Kim Haywood.
“It was justified by confident processor assertions that farm supply had dramatically exceeded retail demand, but an almost unprecedented, overnight, 10p/kg upward adjustment is more than a correction – it is an admission that a serious miscalculation was made and that abattoir stocks are threadbare.”
The NBA also warns that overall slaughter cattle numbers will continue to contract unless retailers work with processors to formulate prices that encourage suckler calf breeders and dairy calf rearers to increase output.
“It is impossible to improve production levels this year, or next, because the cows that would have produced the cattle that should be coming forward are long since dead,” said Ms Haywood.
“Additional supply falls are in train for 2012 and 2013 as well, because of this year’s, and next year’s, 2.5% drop in suckler cow numbers and the ongoing 2.7% fall in the dairy cow herd.”
“On top of this a further 7% reduction in total UK production can be expected over 2010 because of the net loss of around 175,000 dairy cross beef cattle born between April 2008 and March 2009.
“The supply chain damage caused by the latter may be either temporary, or reduced in 2011, because of a recovery in the use of beef bull semen on dairy cows that began earlier this summer.
“But the impact of the contracting national cow herd can only be reversed if farmers are made to feel confident they will earn more from cows that produce calves, than they do from selling potential breeders into the manufacturing beef market.”
* Has the NBA got it wrong? See Phil Clarke’s Business Blog