Wednesday, 3 February 2016

What will the beef price do in 2016?

There are a number of indicators pointing at a tough year for the beef price. This is due to a combination of factors, including, but not exclusive to, more animals on the ground, more animals in Ireland and the exchange rate making imports cheap.

However, there are many factors at work which make it difficult to say for sure what will happen or how far it will fall.

We have faced similar challenges in previous years. In 2014, with increased domestic production and imports, the volume of beef on the UK market was high. This met a lacklustre demand and the supply/demand balance was unfavourable for producers. Into 2015, prices started the year below year-earlier levels and once again came under pressure. While tighter supplies moved the balance swiftly and prices quickly recovered.

Since the autumn, prices have been on a downward trajectory again. A range of factors have caused this, including the Sterling/Euro exchange rate and increased cow slaughterings. So far this year, prices have slowly drifted, a penny here and penny there.

At the moment, it is difficult to see how prices could increase from current levels. Unless things do change, for example if demand performs much better than expected or the exchange rate moves into a more favourable position, the market could well see further decreases.

UK beef and veal production is expected to increase; latest AHDB Beef & Lamb forecasts suggest a two per cent rise. In addition, In Ireland, a notable increase in calf registrations over the past couple of years and lower live exports last year mean that the number of cattle available for slaughter in this year is expected to be higher. A significant proportion of the increased Irish production could well be available to the UK market at competitive price.

Adding to the pressure on prices, major processors and retailers are focusing on specification, whether it be movement, weight, conformation or age. Price penalties for cattle falling outside their favoured specification look likely to be a major issue for the sector this year.

AHDB continues to work hard to stimulate demand for the product and with work to support the farmgate price. During February and March 2016, we will be running an integrated PR and social media campaign to encourage consumers to include beef casserole and stewing cuts, such as beef dice, shin or braising steak, in their weekly family cooking repertoire. This comes on the back of the cut development work being launched to the trade to improve the eating quality of these less popular cuts.

Our summer trade promotion will focus on beef kebabs, burgers and Steak Bar products, with lesser known steaks such as the tri-tip and Denver featuring prominently.

Our consumer brand, Simply Beef & Lamb, has been working with actress Fay Ripley, most famous for her role in Cold Feet, to promote the mini roast. She has featured in video, social media posts, competitions, stories in women’s magazines, articles in the national press and blogger-influencing events to get mini roasts noticed and understood by Britain’s parents. 
Beef Mini Roasts were supported by a seven-week PR and advertising campaign. 

Over 17 million adults saw our press ads, with 22 million digital impressions being delivered. Nearly half of our target audience saw a TV ad at least three times over the course of the campaign. Meanwhile our Meat Elite programme is targeting journalists and bloggers, working with key press titles to provide them with insights, trends and expertise they would otherwise not have access to. 

In addition, we are launching a beef educational resource for secondary schools as part of our long-term strategy to introduce future consumers to beef and lamb.

The aim of this work is to underpin demand at a difficult time, but there is no doubt that prices for cattle meeting specification consistently fare better during periods of declining farmgate prices. As the market comes under pressure, achieving the right specification for conformation, fat class, weight and now movement will best help to soften the impact of any downwards pressure on price.

No comments:

Post a Comment