8 March 2002

Red meat needs makeover

By James Garner

RED meat marketing is in a mess and needs a radical £5m overhaul, claims an industry think-tank set up to look at its shortcomings.

The Industry Forum, which was formed in June last year to examine the red meat food chain, said it had struggled to even identify a chain before launching a 10-point plan at its conference in London this week.

After nine months of research, the forum said the red meat sector was broken and fragmented, lacked transparency and communication between sectors was "awful".

Some of its planned changes will affect farmers, including reform of the deadweight pricing system, adopting best practice and benchmarking costs and efficiency in a new national scheme.

The forum includes the NFU, DEFRA, the Institute of Grocery Distribution and representatives from the Scottish Executive and Welsh Assembly as well as farmers, processors and retailers.

It is headed by Peter Barr, chairman of the Meat and Livestock Commission, who told visitors at the conference: "I have spent a long time over the last year looking for the supply chain. But, quite frankly, I have concluded that it doesnt exist. Its a myth that farmers talk to processors and retailers talk to farmers.

"Instead of a supply chain, parts of it are like a spiders web. There is lots of costly regulation, a history of under-investment, not enough transparency, low profitability, mutual distrust and growing import penetration."

In response, the forum plans to overhaul the sector by implementing a three-year plan. "We need to improve our competitiveness, our profitability and most importantly the quality of the product we offer. We are now very much at the action stage. We hope within a year people will say it is encouraging and get behind us," said Mr Barr.

One of the main thrusts of the plan was to demonstrate best-practice supply chains, said MLC strategy director, Bob Bansback.

"We want to set up models where each player gets a decent return, where it is a win-win situation all the way, through equitable distribution of profits and using best practice techniques."

But Peter Scott, director general of the British Meat Federation, said that cutting the chain would not automatically result in more profits. "The pig sector has a very short chain, but is losing money hand over fist. Shortening the chain is not necessarily the answer.

"There is a lot of complexity in the middle of the beef and lamb chain and the cry for transparency will not necessarily solve this."

One feature that is bound to cause a stir among producers is reform of the deadweight payment system. Mr Bansback said the current system did not always reward beef and sheep producers for quality.

But John Thorley, chief executive of the National Sheep Association, said: "The biggest problem with the deadweight system is buyers are not prepared to pay a proper price. It is much too low for the investment needed."

The plan also contains a benchmarking system, called Metrics, for all red meat livestock farmers, after a trial with 30 members of the National Pig Association. &#42

FOOD CHAIN REFORM

&#8226 Set up a number of best practice supply chains which make money.

&#8226 Support the training of the next generation of managers (in the processing sector).

&#8226 Provide more in-depth consumer research.

&#8226 Assist the processing sector with master classes based on techniques used to achieve big improvements in the car industry.

&#8226 Improve dwt price procurement for cattle and sheep.

&#8226 Roll out PROBE benchmarking technique, which has been successfully used for different sectors of the supply chain.

&#8226 Roll out METRICS system for benchmarking livestock producers.

&#8226 Look at the feasibility of a centre for red meat excellence.

&#8226 Initiate value chain analysis in the red meat supply chain.

&#8226 Introduce Efficient Consumer Response techniques in existing major retail and food service red meat supply chains.

Scheme a success for Waitrose

Waitrose has operated a best practice scheme with Dalehead Foods, which has involved about 35 pig producers, since the mid-1980s.

Richard Sadler, head of meat and fish buying for the retailer, said that the scheme, which supplies all its British pigmeat, had been very successful.

"While it is not a perfect answer, it has held good. Most of the producers who joined are still with us, and we have more wanting to join than leave, so producers seem quite happy."

Group members are paid on a cost of production basis that is linked with the wholesale price and the retail price. He reckoned producers would currently be receiving about a 10% premium above the spot price. Improvements had also been made in tightening carcass specifications and meeting Waitrose customer requirements, he added.