Dunfermline Athletic

MEAT PRICE INFLATION

Tuesday, 12th Aug 2008

12/08/2008: What is driving up prices of beef and lamb?

Quite simply it is supply and demand factors that are forcing beef and lamb prices up.
There is less British beef about than there was this time last year and the market price has risen 26% since the start of 2008.

For the week ending 2nd August 2008, cattle numbers through Scottish abattoirs showed a drop of just over 40% compared to the corresponding week in 2007.
Cattle numbers through auction markets were down 31% from 914 to 627.

Why are we seeing this drop in production?
Common Agricultural Policy has moved away from subsidies and the Single Farm Payment that replaced it provides no incentives for farmers to produce beef. Add to that attractive prices for cereal then there is little surprise that there’s a shortage of home grown beef.

The UK is only 80% self sufficient in beef consequently imports play an important part in the market place. Currently imports are being heavily disrupted for a number of reasons.

Ireland is also short of beef therefore there’s no hope of them easing the problem of supplies.

Brazil is effectively excluded from the European market for animal health and livestock traceability reasons,

Argentina has severely reduced the volumes they export.

The lack of imported beef pushes the home price up. Scottish butchers sourcing quality Scottish beef are therefore paying much more for their beef.

Lamb prices are 10% higher than in the same period last year reflecting a 14% drop in production. With lamb we see strong export demand, and coupled with a weak sterling makes this trade attractive.


Pork prices are also up 25% on this time last year. These have been forced up by higher feedstuff costs but also because pig producers have gone out of business with the poor return they have been getting in the face of cheaper imported pork that does not match the welfare standards in the UK.

Price increases have to be passed on or else the butchers will not be in business for long.
Food price inflation is at a record high and meat is not contributing to
this. It is just a pity that meat
prices that have been suppressed since 1996 have gone up all at once.



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