The average retail beef price rose 15% last year to 520p/kg, but the average price cut received by suppliers was up 26% at 259.6p/kg, according to Eblex figures – representing 50% of the total shelf price.
There was also good news for lamb producers, as average farmgate returns went up 26% to 296.8p/kg, while retail prices only rose 9% to 628.8p/kg.
The higher returns reflected the fact that margins were tighter for beef processors, said Eblex CEO Richard Lowe. “Farmers will welcome the news they received a larger share of retail price, but the impact of increased costs means they are still struggling to achieve real profitability.”
Processors remained under severe pressure from the exchange rate and tightening domestic supplies, he warned.
“The months ahead will clearly be testing times for the UK beef and lamb supply chain – particularly as the industry waits to see the wider impact of the recession,” he said.
Retail price increases helped farmer confidence, according to Alistair Mackintosh, chairman of the NFU Livestock Board. “We are presently seeing a more sustainable and stable farmgate beef price in England and Wales, which is helping to improve producer confidence,” he said.
Although the retail market for fresh and frozen beef was £1.7bn in 2008, and for lamb £634m, volume sales slipped 2.3% on beef and 4.1% on lamb. Eblex attributed this to the industry experiencing exceptional sales in 2007, driven by poor weather.