Sustainable prices better for all
A lack of sustainable farmgate prices for beef and lamb could lead to consumer dissatisfaction and ultimately a decline in consumption, according to a new report commissioned by the English Beef and Lamb Executive (EBLEX).
The report produced for EBLEX by independent consultants Promar International shows that in the past, the EU's Common Agricultural Policy (CAP) has protected beef and lamb supply chains and consumers from price volatility.
However the ending of production subsidies for English farmers is likely to see consumers facing increasingly volatile retail prices unless farmgate prices move to sustainable levels.
The report adds there are significant levels of consumer dissatisfaction associated with highly volatile prices, which is bad news for business brand value and equity.
The research notes there has always been a group of 'loyal' consumers of home produced beef and lamb, but increasing concerns regarding the environment and climate change are now driving significant growth in consumer preferences for locally produced food.
This growth is expected to continue and should effectively add to the numbers of 'loyal' consumers in the future.
Under these conditions the challenge for England's beef and lamb supply chains is to adapt to life without subsidies and build sustainable relationships.
Outlining a number of possible strategies, the report notes that in highly competitive markets such as the UK one of these is to use differentiation to create demand for products. For the red meat sector, differentiation on the basis of eating quality has been an important growth area.
Successful product differentiation not only provides opportunities for growth, but can also provide a degree of protection from volatile prices.
John Cross EBLEX Chairman said, "It is clear that the most successful businesses have a number of strategies to manage volatility and provide their customers with the products and services they want.
"However it is time our largest supply chains fully made the transition to the post-CAP world by looking to deliver truly sustainable farmgate prices. Not only does it make sound business sense, it makes sense for our landscape, our society and our consumers."
Notes to Editors: Strategies To Counter Volatility And Meet Customer Preferences is available on www.eblex.org.uk
EBLEX will be publishing its fifth annual edition of Business Pointers farm costings data later this month. This data examines the profitability of beef and sheep enterprises in England during the year to the end of March 31 2007.
