A drop in consumer demand for beef and rising finished cattle numbers are to blame for the slump in farmgate prices, says one of the country’s biggest meat processors.
ABP UK managing director Tom Kirwin said 2019 had been an exceptionally difficult year.
The domestic beef market had been hit by a 14-15% decrease in consumer demand at the same time as a 2% increase in supply, he said.
“Those variables put more meat on the market than the market can absorb,” Mr Kirwin told a hearing of the House of Commons Environment Food and Rural Affairs Committee.
“They are difficult variables we are having to deal with.”
Summer 2019 had seen a substantial change in consumer behaviour, with consumers switching away from beef towards fish and other products, Mr Kirwin told MPs on Wednesday (16 October).
“We have never seen it to the level they switched in 2019,” he said.
Committee chairman Neil Parish asked why retail prices had remained relatively steady rather than matching the fall in farmgate prices.
“What we can’t quite work out is who has gained from the fact that farmers are getting substantially less,” he said.
Mr Kirwin said retail prices lagged behind farmgate prices as stock was cleared.
But more recently it reflected the decrease in beef prices to farmers.
“Retailers have been relatively quick in reflecting where the market is,” he said.
Mr Parish said he was not convinced.
“I really am concerned at the lag and what has been going on – otherwise we wouldn’t be having you all in here this morning,” he said.
But Mr Kirwin said high-street prices “absolutely” reflected the drop in cattle prices.
NFU vice-president Stuart Roberts said an unprecedented fall in prices was having a serious impact on farmers.
Some producers were receiving £180 per animal less than last year, he said, with £170m taken out of farmers’ pockets between November 2018 and August 2019.