18th October 2013

Farmgate Prices Remain Strong

The volume of cattle handled by Scottish price reporting abattoirs is currently around 10% higher than a month ago, according to Stuart Ashworth, Quality Meat Scotland, Head of Economics Services.

In England and Wales, cattle volumes have steadied over the past couple of weeks after increasing by around 3,000 head per week, around 20%, since the beginning of August.

Similarly prime lamb availability has increased and auction sales of prime lambs are currently around 7% higher than a month ago in Scotland and 20% higher in England and Wales.

“Increased volumes often result in some market price correction,” said Mr Ashworth.  “It is therefore not surprising that prime cattle prices have steadied over the past few weeks as the market has become slightly better supplied.

“Nevertheless, producer prices remain 12-15% higher than last year with cattle availability still struggling to match last year’s levels.

“In contrast, prime lamb prices have edged higher despite the number of lambs on the market rising and being higher than this time last year.  Prices now stand just short of 10% higher than this time last year.

“Pig producers have also gained from the general strength of the red meat market with prices also some 10% higher than 12 months ago.”

However, while producers are benefiting from higher farmgate prices, consumers continue to get exceptional value for money, although they may not see it that way.

“Latest figures from the Office of National Statistics show that consumers are paying 8.8% more than last year for beef, 8.2% more for UK lamb, and 3.3% more for pork,” commented Mr Ashworth.

“When compared to the 10-15% increases paid for livestock by processors and butchers, these more modest increases at retail level are exceptional value for money and illustrate the squeeze being felt in the supply chain beyond the farm gate.”

These increases in retail meat prices are however considerably higher than the many measures of general consumer price inflation.

“The Consumer Price Index is only 2.7% higher than 12 months ago and the RPI, which is used to set the increase in state pension for next year, is 2.5% higher,” said Mr Ashworth.

“Consequently consumers will once again be seeing meat retail prices as ‘high’ when trying to manage their weekly budgets.”

Nevertheless, although consumers may be wary, the supply prospects continue to favour producers with provisional UK census results recording a decline of at least 1% in the UK lamb crop and 3% fewer cattle under one year old on farms in June this year.

“Census results from Ireland similarly show a decline in cattle and sheep numbers, with the number of cattle under one year old down 3% and prime lamb numbers almost 3% lower than last year,” said Mr Ashworth.

“However, what both the UK and Irish census show is potential for a short-term increase in cattle supplies with the number of one to two year old cattle on farms in June, 2% higher than last year in the UK and 9% higher in the Republic of Ireland.”

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