Beef producers angry at supermarket price wars

Supermarkets have gone too far with the latest round of heavy discounting that has seen the price of prime beef mince at one chain fall £2 to only £3.50/kg, say beef industry leaders.

Shoppers saw shelf prices for lean beef mince drop 3.5% in February, wiping an estimated 10m a week off industry earnings.

Rump steak prices fell even further, by 7.5%.

The National Beef Association says this is the wrong message to give farmers at a time when a boost to their confidence is critical.

“The future development of the entire UK beef sector is being held back by myopic and unsustainable supermarket discounting,” said chairman Duff Burrell, who likened competition in the grocery market to “Chicago-style price wars”.

“Unless there are genuine and effective moves to inflate the retail value of beef, it is difficult to see how the domestic industry can survive and continue to deliver what the supermarkets themselves agree is the standard and quality beef they want.”

Mr Burrell called on retailers to try to grow sales of premium-quality beef and urged Tesco to halt the spread of the “discount disease” to product in this category.

Meanwhile, reports that Marks & Spencer was planning to cut the amount it pays food suppliers by up to 10% were wide of the mark, the company has told Farmers Weekly.

But food suppliers did face new charges, even though clothing manufacturers would bear the brunt of the squeeze, a spokeswoman admitted.

Chief among these was the deduction of a new “marketing allowance” equivalent to 0.5% of the cost of the product.

“We’ve changed a lot on marketing, and it’s had a big impact – not just on the specific food products mentioned, but as part of a ‘halo effect’.

It’s all based on the fact that we’re seeing volume increases as a result of heavy investment by us.”

Suppliers will also have to pay an extra charge if they are deemed to have benefited significantly from rising sales volumes, although the spokeswoman said this would probably not hit primary producers.

“We don’t expect that to be passed back to farmers.

It will impact milk suppliers, but not our dairy farmers.

Across a 12-month period, our milk price will be the best in the industry.”