Major differences in classification charges
By James Garner
EXCESSIVE cattle classification charges could be helping some abattoirs boost revenues, according to a report by the NBA.
In its report, the NBA concludes that by cross-referencing with independents like the MLC, the actual cost of classifying a beef carcass is about 75-80p, but the average charge made to farmers is £1.50.
This latter figure also disguises bigger variations, says NBA chief executive Robert Forster. "Companies like Midland Meat Packers and Anglo-Beef Processors charge £1/beast, substantially less than others."
The NBA singles out two abattoirs that charge more for carcass classification – Dawn Cardington in Bedford charges £2.47/beast, while Dovecote Park in Pontefract charges farmers £3.06.
Dovecote Park declined to comment to farmers weekly, but Dawn Meats Isla Roebuck says: "Dawn Meats offers suppliers a fully transparent cattle price and deductions package.
"Our suppliers are intelligent business people who do calculations based on price and deductions before they supply us with any livestock. They know we can be trusted to pay them fully and promptly."
Mr Forster says beef farmers need to be more aware of deductions. "And when theres excessive charging farmers should put pressure on processors." He also recommends that farmers have kill charges itemised and not billed as one figure.
Using his figures, Mr Forster calculates that an abattoir with the capacity to kill 25,000 beasts/year, charging £2 extra for classifying carcasses, boosts its annual turnover by £50,000.
"Farmers need to be aware of these charges. Currently, they are not shopping properly," he says.
Les Armstrong, chairman of the NFUs livestock committee, says if producers feel they have a grievance with carcass classification charges, they should take it up with their processor.
Nevertheless, the union does want to see transparency in the processing sector. "We would like a more standard transparent system, both deadweight and liveweight."
According to the MLC, the only independent carcass classification body in the country, variations in charges do occur. "Some of this is because of different throughputs. An abattoir with a higher throughput can charge less on a unit cost basis," says a spokesman.
Mr Roebuck agrees, saying that charges and deductions do vary from plant to plant due to throughputs, plant efficiencies and location.
Referring to the wider issue of total deductions, Mr Forster says that these, too, are subject to great variability. "They can vary from lowest at £9.46/beast to common charges of £15-£18/beast."
While one company charges £3.50 for SRM removal, another is charging £8. This £4.50 difference on a 25,000 kill abattoir amounts to £100,000 extra revenue, he adds.
However, Mr Roebuck reckons that slaughtering costs incurred by the meat industry "are by no means met by deductions made from livestock payments".
He urges a tighter working relationship between the NBA and processors. "The NBA and processors may work more constructively together to lobby for lower total costs in our industry.
"We both have an obligation to develop our industry profitability for all parties. Our resources should perhaps be combined to secure beefs space on the supermarket shelf in the face of growing competition from cheaper substitutes." *
Farmers need to look at their carcass classification charges closely, says Robert Forster.
• Charges vary between processor.
• Have charges itemised.
• Greater transparency?