11 April 1997

Multiples alone bringing beef sales to near pre-BSElevels

Why are lower farmgate beef prices not reflected in the retail price of beef?

Robert Davies and

Shelley Wright investigate

DESPITE complaints that supermarkets are not passing on lower farm-gate prices for beef to consumers, the multiples are the only retail outlet that have brought beef sales back to almost pre-BSE crisis levels.

Meat and Livestock Commission figures for the year from Mar 20, 1996, when ministerial announcements on BSE and the human brain disease CJD sent the beef market into free-fall, show that overall beef sales are down 13% by volume.

But while prime cattle prices are still almost 20% down, the MLC figures show that retail prices are just 12% below pre-crisis levels.

Farmers have criticised supermarkets saying that if they dropped their beef price, in line with farm-gate prices, demand would be stimulated and beef sales would recover. But the MLC figures show that supermarkets have managed to bring sales volumes back from a slump of more than 20% to within 6% of historic levels.

That compares with butchers which are still suffering a 17% slump in sales and co-operative stores where beef sales are 31% down on the levels seen before Mar 20 last year. Sales through freezer centres, although traditionally a minor outlet for beef, are 89% down.

A spokesman for the supermarkets organisation, the British Retail Consortium, said that raw material costs accounted for less than 50% of the multiples overall costs. And NFU deputy president Ben Gill also pointed out that new BSE controls at meat plants had led to additional costs for the slaughter sector which had to be passed on to all beef retailers.

He was surprised that, with the extra costs in the processing chain, the gap of 8% between retail and farm-gate prices was not wider. That indicated that there was intense competition between retailers he suggested.

He said that the unions aim was to promote British beef, and increase its sales, through farm assurance. That was the way to strengthen British beefs market share and improve returns.

Figures for individual cuts of meat show that steak was the star performer with sales not only fully recovered, but 2% higher than they were before the BSE problems. Roasting beef remained 4% down and stewing beef 14% down.

Mince sales ended the year 24% below their old levels, but that is a huge improvement on the initial plunge of 50% in sales in the weeks immediately after the ministerial announcements. Since the introduction of MLCs quality mince campaign last June, sales have recovered steadily.