Finishers must hold firm for beef market prices
11/07/06

Finishers should stand firm against slaughter sector attempts to talk down prime cattle prices and stick out strongly for further rises over the short supplied summer period, the National Beef Association has warned.

photo courtesy www.jennifermackenzie.co.uk

"The days when processors who are being squeezed by their own customers could automatically get themselves out of income trouble by leaning on beef farmers are over." Declared NBA chairman, Duff Burrell .

"Everyone in the industry knows that the only possible answer to the revenue problems the slaughter sectors is currently facing is a steady, and prolonged, lift in retail prices because habitual pressure on farmers is no longer an option."

"More retailers are realizing this and are beginning to inflate shop prices so there is more money in the system and a better chance of positive margins being generated on a cross-sector basis as a result."

According to the NBA the outdated tactic of processors and farmers throttling each other every time slaughter margins get tight cannot continue.

"The supermarkets who are at last accepting this are beginning to help by raising shop prices. Sirloin steaks have moved up around ten per cent, or around £1 per kilo, over the past three weeks and there appears to have been a general and very welcome, 10-12 per cent, lift in lean mince values too." said Mr. Burrell.

"These companies need all the encouragement the industry can muster to continue to build on this constructive decision which, if retail prices rise high enough, means there could be enough money in the beef sector for all its participants, particularly farmers and processors, to survive."

"It would be utterly counterproductive at this stage for some slaughterers to slip into the lifetime habit of trying to force down cattle prices now they are under pressure because it is perfectly obvious both finishers, and breeders, are struggling to win through on current income and could not handle a fall."

"It is unfortunate that some processors are mistakenly trying to increase supplies, and reduce costs, by whipping up fears of a repeat of last summer's market collapse and persuading finishers to sell short."

"But feeders can, and should, counter this by firmly pointing the EU beef supplies are tighter than ever, domestic demand is roaring, and the market will be balanced over July and August but right through autumn too."

"It is critical that they do not allow themselves to be bullied by companies who have still to see that retail attitudes are beginning to change for the better and so should hold out for more money - not less," Mr Burrell added.

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