01 September 2000

TRADITIONAL quality premiums will be harder to obtain in the very different beef market emerging from the BSE crisis.

Scottish producers are already complaining that north of the border bonuses are being squeezed. Multiples that now retail over 70% of meat sales are very reluctant to pay much above average to supply their premium quality beef lines.

Duncan Sinclair, one of MLCs senior economic analysts, says retailers know that there is an upper limit on what customers will pay for the best beef, and the costs of extra hanging, additional drip losses and trimming come into the pricing equation.

“There is only so much money about and the customer profile of most multiples dictates that there is only a niche market for the very best beef. One exception is Waitrose which targets high income areas.”

Changes are also occurring in specialist retail butchers shops that once concentrated on selling top quality beef. The number of outlets has fallen, and the proportion of meat crossing counters in the form of convenience products made from manufacturing quality beef has increased.

But Mr Sinclair believes that the biggest squeeze on quality premiums, especially in Scotland, is the lack of business being done with Europes top restaurants and high class retailers.

Raymond Wight, managing director of Scottish Premier Meats, agrees. He claims that if the UK cannot export more beef soon, supermarkets will continue to drive down the quality premiums and beef prices in general. But he is still telling suppliers that going for quality is the only way forward.

“We now tell farmers the liveweight, the deadweight and killing out percentage of their cattle to show them that well bred stock produce more saleable meat and leave them more money. I believe the UK beef industry can be a niche supplier for those all over the world for whom quality is more important than price.”

During a recent week steer prices in Scotland were 5.9p/kg liveweight above the GB average of 91.6p/kg, but the differential between a U4L carcass and one that classified 0 was 21p/kg. In England and Wales the gap was 23p/kg. Mr Wights message for producers is that it pays to market quality cattle.

A claim by Brian Pack, chief executive of the Aberdeen and Northern Marts group, that the creation of ASDA/Wal-Mart is helping to drive down quality premiums, is rejected by the company.

Spokesman Nick Agarwal insists that it works closely with suppliers and would like to introduce a cost-plus system for beef. He adds that the planned launch of a new range of premium quality beef lines would provide a marketing opportunity for producers who had special cattle to sell.