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Different Parts of Meat Supply Chain Should Communicate Better

15 April 2016

UK - Steps to further improve the open sharing of information between the different links of the red meat supply chain are key to ensuring the industry benefits fully from market opportunities, according to Stuart Ashworth, Head of Economics Services with Quality Meat Scotland (QMS).

“The skills of those who work in our industry – from farmers to processors and butchers - are a huge asset but it is vital there is also good understanding of the challenges and opportunities in each part of the chain,” said Mr Ashworth.

“One perennial challenge is the nature of animal biology that means there is a lengthy time involved in livestock production.

"Coupled with the variability of weather and feed availability, this means making changes in response to market signals, can take time. Resolving this challenge is not easy but illustrates the need for greater appreciation by each link in the supply chain of the constraints faced by each sector.”

Looking at recent market trends, Mr Ashworth said the trade in prime hoggs was an example of the potential offered through strengthening relationships and communication in the red meat chain.

The latest QMS analysis shows that after dipping in the week immediately before the Easter weekend, prime hogg prices have shown some strength in the current week and regained all of the previous week’s decline. A contributory factor to this, said Mr Ashworth, is the reduced supply of prime hoggs on the market after the Easter surge.

Prime hogg slaughterings during January and February are estimated to have been around 8 per cent lower than last year.

“There has been a greater reduction in slaughterings during January and February than the expected decline in slaughter hoggs carried into 2016. This may indicate a much smaller reduction, if any, of hogg availability for the remainder of the marketing year,” said Mr Ashworth.

However, the proportion of hoggs arriving at auctions at liveweights above the SQQ categorisation (25.5kg – 45.5 kg liveweight) is running slightly higher than last year and at its highest level for several years.

“Over the past couple of months between 25 per cent and 30 per cent of prime hoggs sold through Scottish auction markets have been over 45.5kg in weight compared to 20 per cent two years ago.

"Over the past few weeks auction prices for these animals has been more variable than for the premium weight range of 39 to 45.5kg liveweight,” said Mr Ashworth.

By falling outside the specification that attracts the most sheepmeat market outlets, the price per kilo of these heavy hoggs can be 10p or more lower than those achieving the optimum weights. However, he said, this may not result in lower revenue per animal, meaning little overall incentive to farmers to change their system to better meet the target specification.

The challenge this presents to the multiple retailer, observed Mr Ashworth, is that while there may be a supply of product available, there is not a sufficient supply of the specification of product they seek. The concern is that this may lead them to seek product from elsewhere which more closely meets their desired product specification.

The challenge for the producer is one of managing the biology of the animal and the production system to deliver lamb of the correct finish and weight to benefit from the market price signals which can move more quickly than the production system can adapt.

“This situation further highlights the importance of good communication flow throughout the chain to ensure our industry can benefit fully from the market opportunities available to it,” stated Mr Ashworth.

TheSheepSite News Desk



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