UK beef farmers given welcome price boost from pandemic steak push
For the United Kingdom’s beef farmers, the coronavirus onslaught initially felt like the last straw.
A complete transformation in the way consumers purchased beef upended carefully constructed supply lines overnight and created a series of perverse incentives that saw the farmgate price fall even as demand went up.
This was because the demand in supermarkets for the cheapest product — mince — rose as shoppers rushed to buy the versatile product as they created more home cooked meals such as cottage pie, lasagne and burgers.
Meanwhile, consumption of high-value cuts normally purchased in now shuttered restaurants, such as steak, plummeted.
This meant that the overall value of a beef carcass fell, with the average price paid falling around 4% in six weeks between the middle of March and the end of April.
Rock-bottom prices
The slump may not sound dramatic, but UK farmers have felt like they have been receiving rock-bottom prices since May 2019, when prices went into a long decline and levelled off without recovering.
Beef farmers in the UK are in competition with imports, particularly from Ireland, and from their own dairy industry, which now produces more than half of the beef eaten in Britain.
Dairy farmers are viewed as being in the ascendancy as they are producing an animal which is more aligned with what supermarkets want — small and lean.
They are also often more profitable as the farmer is able to spread the high cost of keeping a cow for a year between his milk and meat output.
Supermarket lifeline
However, from the depths of the crisis a new consensus has emerged in the supply chain which has thrown a lifeline to struggling producers.
Supermarkets have heavily discounted steaks and roasting joints to help rebalance carcass usage and consumers responded, helped along by weeks of sunshine that saw barbeques lit in back gardens across the country.
By the middle of May, retail consumption was more than 25% ahead of where it had been the previous year, as restaurants remained shut, and farmgate prices had returned to their pre-coronavirus level.
To the surprise of many, they then carried on rising and now stand at their highest level for over 12 months, with some analysts predicting that prices will continue to rise until at least the Autumn.
Farmers, long used to criticising supermarket power for holding down prices, have heaped praise on the supply chain for its response to the crisis.
It remains to be seen whether this new spirit of collaboration can overcome the structural problems that remain in the industry, but the goodwill it has generated is an excellent starting point.
By Andrew Meredith, Farmers Weekly deputy business editor, reporting for Farming Unearthed. Listen to this story and more on the Farming Unearthed podcast.
