Retailers should brace themselves for a tightening in UK beef supplies this summer, the MLC has warned.
The number of prime beef cattle for slaughter is expected to fall by 1.5% and a similar scenario is expected in the Republic of Ireland. "We can't say what the impact on prices will be because much depends on how much supplies tighten. But retailers should be preparing themselves," MLC economic and policy manager Mark Topliff told The Grocer.
Although there is often a seasonal lull in the late summer and autumn, the MLC insists the dip in supply will be more significant than usual. The warning follows a decline in the UK herd as beef producers are forced to sell up because of poor returns for cattle.
"The industry has been hit hard since the removal of subsidies based on payment per head, and many producers no longer see a margin," added Topliff.
The NFU's livestock chairman Thomas Binns said: "Farmgate prices need to rise if producers are to remain in business and reinvest for the future."
He claimed retailers did not fully understand decoupling and that the new single farm payment failed to bridge the gap between the cost of production and the market price.
"Store cattle prices have improved compared with last year. That could be an early sign the market is tightening. Our immediate concern is that finished prices do not reflect the higher input costs."
Sainsbury's meat buyer Richard Squire said the retailer was working with its supplier ABP and was preparing for a tightening of supplies later this year.
"The market will dictate the price and there could well be upward price pressure at the farmgate later this year. We've seen supplies tighten before on a seasonal basis. It happens most years and may just be for specific cuts."
Sainsbury's had longer-term concerns about supplies, he admitted. "That's why we work with our producer groups and have several different contracts with producers via ABP," he said.