The beef supply chain faces another tough year, as retail price pressure continues to weigh on the sector at a time of increasing supply.
“Price deflation continues to restrict opportunities for income growth at the sale point, especially with the retail battles between the traditional and discount supermarkets continuing to intensify,” Scottish Association of Meat Wholesalers president Alan McNaughton told the association’s annual conference in Glasgow.
“There are also the current uncertainties of Brexit and the movement of currency rates between sterling and the euro to contend with, plus the pressure of plant and production regulations.”
Mr McNaughton said it was good there were signs of an upturn in livestock numbers in Scotland.
The pool of six- to 36-month-old cattle was up 1.7% year on year, while calf registrations had climbed 2.5% in the final quarter of 2015.
“This is an essential development for the meat chain in Scotland, which has always been excellent on quality, but has been increasingly disappointing in recent years in terms of quantity,” he said.
“It’s certainly encouraging to see numbers starting to grow again.”
But NFU Scotland has expressed concern at the continued downturn in prime cattle values and the pressure this is putting on store animals.
“We are seeing prices back more than 10% year on year for both the store and finished markets,” said livestock chairman Charlie Adam. “With late support payments and some challenging weather, it is a tough time for Scotland’s cattle farmers.”
With finished cattle values at 328p/kg, prime animals are worth almost £115 a head less than they were a year ago.
Mr Adam said there was an urgent need for Scottish farmers to re-establish the premium normally attached to the Scotch brand.
“It is also clear that retailers are fighting to regain competitiveness and increase margins. This means the amount they pay for beef is being pushed lower. But that doesn’t appear to equate to a better deal for consumers, as beef prices at a retail level appear static at best.”
NFU Scotland is also concerned by reports that it is taking more than five weeks to get cattle into some abattoirs. This is making it harder for producers to hit specifications.
The union has extended its programme of drop-in sessions at store sales across the country.