THE UK BEEF sector will not survive CAP reform unless retailers immediately restructure pricing at retail and processing level, the National Beef Association has warned.
“The fierce retail instinct to attack rival companies through persistent and progressive undercutting of core, home-produced products is threatening the UK industry,” NBA chief executive, Robert Forster said.
Mr Forster said that in discussions with the major retailers he had learned that they were not making money from beef.
“We are dismayed to discover that none of the retailers, and therefore none of the processors that serve them, is making money.
“They have squeezed each other so hard on price that they have effectively choked the product of any profit and now threaten to destroy both their supply and processing base.”
“It will be impossible for the domestic industry to survive CAP reform in January unless the retailers realise what they are doing and quickly change tactics,” he added.
The NBA said retailers should refocus their competition on manufactured grocery items and specialist products where there is a margin that offers scope to manoeuvre on price.
But Mr Forster said he was in no doubt that every supermarket in the UK wanted to maintain its commitment to UK beef.
“British beef is a high quality, high provenance product that satisfies the retailers‘ long-term aspirations on social and environmental integrity – which many beef imports do not.
“On top of that they know that a well-organised home supply base is their best defence against delivery interruptions and the nightmare of empty shelves,” Mr Forster said.
“The UK beef sector can adjust to the production cost challenges thrown at it by the withdrawal of direct subsidies in January only if beef cattle are very quickly purchased by processors for 250p/dw kg compared with around 195p at present.”
“This encouraging signal must be given quickly, otherwise too many good farmers will give up production and then it will be too late,” Mr Forster added.
Meanwhile Irish cattle producers have also told beef buyers from Tesco and Sainsbury‘s to pay more to secure future supplies of Irish beef.
“We pointed out that Irish farmers are not making profits at the current price,” said Irish Cattle and Sheep Association policy officer Ray Dunne.
Post decoupling, Irish farmers would only produce for a profit, so buyers would have to pay a higher price, he said.