7 September 2001

Deadweight sales & price transparency

By Hannah Velten

WITHOUT liveweight auctions, price transparency for prime cattle has slipped further into the shadows with many beef finishers missing out on valuable revenue because of secrecy by some abattoirs, fears the National Beef Association.

For producers with no previous experience of deadweight selling, choosing an abattoir can be a gamble, says Robert Forster, NBA chief executive.

Current deadweight price reporting does not help producers work out which style of animal an individual abattoir prefers and which company pays most for their particular type of stock, he says.

"Instead of auctions, where the value of an animal is decided when the hammer falls, final deadweight payments depend on the abattoirs choice of dressing specification and judgements of carcass conformation and fatness. Without openness from abattoirs about price structuring and independent assessment of carcasses, producers are at a disadvantage."

However, Mr Forster points out that although the auction system allows some price transparency, it has faults. "As long as there is no cheating on the scales, producers around the ring can see the exact value of animals being sold. But because most price reporting is still weight-based, producers not attending markets have no idea of stocks finish or shape.

"Before foot-and-mouth erupted, there were moves to use estimated classification – known as quality price reporting – as the basis for auction reports. Prices would be given for three types of cattle – premium supermarket specification, prime grade cattle and others, with poor conformation or excess finish."

NBA will continue to push for this initiative once markets resume and to have classification-based prices published. "This will give producers a better indication of which cattle a particular market wants."

However, establishing what type of animal individual abattoirs are willing to pay more for is difficult, says Mr Forster. Only 23 out of about 380 abattoirs are compelled to report their prices and each kills over 20,000 cattle a year. Even within this narrow group, there is no standard dressing specification with which to compare individual abattoirs.

"There are four official specifications which means there can be a 4% variation in carcass weights after dressing, depending on the specification used. Some trims are mild, such as MLC Standard, whereas others like the new EU specification are more severe.

"To help compare deadweight prices more easily, the NBA would like to see all abattoirs employ the same dressing specification to standardise prices."

In addition, Mr Forster wants independent classification and weighing of carcasses in all abattoirs. MLC assessors are currently present in 60 abattoirs, overseeing 53% of the British kill. There is no guarantee that producers, particularly those using companies which weigh and classify themselves, are receiving full payments for all stock, says Mr Forster.

"To increase price transparency, NBA would like to see an expansion in MLC grading operations or contracts given to independent companies and for all abattoirs to report standard R4L prices."

Quality price reporting from auctions and independent verification of single standard dressing and weighing, should help producers decide which abattoir or market would give them the highest returns. &#42

PRICE TRANSPARENCY

&#8226 Quality price reporting.

One dressing specification.

Independent assessment.

Price forum

A forum on the importance of price transparency for prime cattle will be held at Beef 2001 on Sep 14 at 12 noon.

Price forum

A forum on the importance of price transparency for prime cattle will be held at Beef 2001 at 12 noon.