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Why beef prices are still being fattened up
IT doesn't happen often, but recently beef farmers have been smiling as their cattle go through the sale ring at the local mart. The prices they are getting have risen by a third in the past two years.
For the shopper that means that the roasting beef which two years ago averaged 6.10 per kilo is now 6.98 – a rise almost twice the rate of inflation. Analysts don't see a fall any time soon.
"Things have been better because we're being paid a more realistic price," says beef farmer Doug Dear from Osgodby, near Selby.
But this comes at a time of recession, and retail beef prices have defied the economic downturn by staying high despite an overall drop in demand since the start of the downturn. So why hasn't the price fallen?
Part of the reason is the length of time it takes to breed cattle for the dinner table – as much as three years from conception to slaughter. Mark Topliff, an analyst with the Agriculture and Horticulture Development Board, says: "There's been a growing shortage of cattle. The dairy herd and the beef breeding herd are both declining."
The most recent figures from 2007 reveal a fall of more than three per cent in the number of beef cattle in Yorkshire. The number of new dairy cows has dropped even more sharply, by almost 10 per cent. So the fall in supply has been greater than any drop in demand.
Slaughter numbers for certain types of beef cattle, particularly steers (castrated bulls), are down by as much as a third since the new subsidy system, the Single Farm Payment, was introduced four years ago. No longer are farmers paid according to how many cattle they have on their farm, but partly on how much they got in the past and partly on the area of land they manage.
"There wasn't that incentive to keep the cows, and so what we've seen is a gradual reduction," says Mr Topliff.
Having fewer cows means a farmer spends less money on feed and the remaining cattle are more profitable. The downside for food lovers is that, with less beef for the shops to buy, prices go up.
The decline of the dairy industry has also contributed to the shortage. In Yorkshire, the number of dairy cows yet to have their first calf fell by nearly 10 per cent between 2006 and 2007. Dairy farmers often use beef bulls to produce calves to keep the cows lactating. These calves are surplus to those dairy farms, but are essentially beef cattle and are worth fattening. As the number of dairy cows declines, so does the number of calves available for beef.
Doug Dear fattens black and white dairy bull calves – the by-product of breeding replacement milkers – on his farm and reports the price for these has also risen. He is confident of his future, but reckons many others are not.
"Everything in this yard will take a year to fatten and I don't know what the price will be in a year's time," says Doug. "If prices don't remain where they are now, people will not want the risk and will revert to arable farming. If critical mass is lost we're going to lose abattoirs and home-produced product."
This outcome would worsen the shortages and push shop prices ever higher.
Among farmers there is a feeling that supermarkets take too large a slice of the price paid by the consumer. Events overseas are also much to blame for the cost of the beef on your plate. We produce about 70 per cent of what we eat. The shortfall made up from buying abroad is increasingly problematic.
Two years ago Brazil suffered a serious outbreak of foot and mouth disease, and a large proportion of the country's exports were banned. "That created quite a shortfall of beef supply in Europe," says Mark Topliff. "Brazil was our second biggest source of imports. It was a relatively cheap source of beef and the new sources have been more expensive."
Argentina, one of the world's best known producers of beef, has cut its beef exports to the UK by almost half. Uruguay's exports to the UK have fallen by more than a third. Meanwhile, the decline of the pound against the euro has made our beef cheaper and more attractive to foreign buyers.
Grassington butcher Colin Robinson says it's the swift nature of the beef price rise which is causing problems. "If prices just gradually increase, nobody seems to notice the difference. But when they jump like they have in this past 12 months, the customer feels that it's you, the butcher, that has put your prices up to make more money.
"But we're actually putting our prices up to cover our costs and try to stay in business. We're hoping it's going to stabilise and people will realise that these prices are here to stay."
Mark Topliff agrees. "We're not going to see a reversal of the supply situation in the next year," he says. And he doesn't think the price that shoppers will pay for beef will change much over the next two years.
"I think it will still remain firm, similar to what we see at the moment because of the supply situation. We hope that when we come out of recession people will feel more affluent and demand will increase again."
Farmer Doug Dear thinks that if the Brazilians manage to implement a robust system of traceability for their cattle – one of the factors which is stopping large scale exports to Europe – things could be
very different.
"As soon as they get their act together, they're just going to flood the market."
If that happens the price may fall – unless shoppers insist on buying British.
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Saturday 11 February 2012
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