For the second year in succession, Scottish beef producers are suffering severe pressure on price and experiencing marketing delays during the crucial spring months.
Wholesale prices for Scottish steers passing through abattoirs last week averaged just over 360p per kg – 20p less than the same time in 2014.
That means an average finished steer weighing 600 kilos is worth £120 less when it enters the food chain, compared to prices last spring.
Adding to the problem, many animals on Scottish farms are ready for market. However, a combination of lower retail demand for beef and a weak euro making exports more difficult – and imports more attractive – means that beef cattle are backing up on Scottish farms waiting for slots to enter abattoirs.
NFU Scotland’s livestock committee chairman, Charlie Adam, said: “Lower demand, falling prices and abattoir delays at this time of year appear to have become perennial problems for Scotland’s beef producers.
“While experts point to a tightening of supplies later in the year, the reality for many beef producers is that prices are now substantially lower than last year. While these may be offset by lower feed costs this season, the delays being experienced in getting animals to abattoirs when they are at their peak runs the risk of cattle no longer meeting the specification demanded by processors and the marketplace.
“That runs the risk of price penalties imposed for stock being too heavy or too fat, and any margin is quickly eroded.
“Currency is also conspiring against us. The weak euro has contributed to more difficult export conditions and greater pressure from imports – particularly from Ireland.
“Industry sources suggest higher imports have had most impact on the market for manufacturing beef and mince that makes its way to the catering sector.
“Given the producer price differential between the UK and Ireland and the strengthening of sterling against the euro in recent months, figures provided by QMS suggest beef imports to the UK from Ireland are up 10 per cent year-on-year at 14,750 tonnes. But analysis of the retail sector suggests that this beef isn’t making its way onto shop shelves and that multiple retailers are actually selling less Irish beef than they did 12 months ago.
“This would then suggest that imported Irish beef has been going into the food manufacturing and foodservice sectors, potentially lowering demand for home-produced beef and mince and feeding back into lower producer prices. Beef imports from other EU suppliers are also up by 20 per cent on the year to 4,100 tonnes and contribute to the pressure.
“While currency is beyond our control, we can do more to make our sector more robust given that lower demand and higher marketings are likely to be a permanent fixture for the Scottish beef sector each spring.
“NFUS will continue to work with QMS and its Beef Marketing Strategy Group. We welcome its decision to adjust the timing of next year’s beef campaign to include Easter and believe it will stimulate demand.”