Beef market outlook
- Beef production forecast to fall by 1.7% in 2023 versus 2022
- Consumption expected to remain subdued as cost-of-living pressures consumers
- Imports forecast to fall by 2%, driven by easing domestic demand
- Exports forecast to fall by 7%, following lower trade in the first quarter
Current market situation
GB deadweight cattle prices have remained at record-high levels through the first 5 months of 2023. Slaughter numbers were above year-ago levels during the first quarter for both prime cattle and cows, but throughputs pulled back slightly through April and May. From a demand perspective, the year-on-year declines seen in retail purchases have slowed, with mince in particular performing well.
At 1 December 2022, the UK cow herd (dairy and suckler) stood at 3.2 million head, down 1.6% from the same point a year ago. The fall was predominantly driven by the suckler herd, which contracted by a further 2.9% to 1.4 million head. The dairy herd stood at 1.8 million head, also contracting but to a lesser extent (-0.6%). The suckler herd has been on a steeper rate of decline for several years, while the dairy herd has by comparison shown more stability. Many producers lack clarity around what changes to government agriculture policy will mean to their businesses, and this is expected to continue to hinder confidence and productivity, particularly in more extensive systems.
Considering wider industry pressures including cost of production, market volatility and reducing farm support, we forecast that the total number of cows in the UK will continue to fall, with the suckler herd remaining on a steeper trajectory than dairy.
Changing output from the dairy herd
Despite the breeding herd continuing to remain in a state of contraction, UK beef production has remained relatively stable over the past few years. This is likely explained by the changing output of the dairy herd, as registrations to beef dams have been in decline for several years. Increasing use of beef genetics has led to more beef cross calves born to dairy dams, animals which typically achieve improved carcase confirmation than pure dairy. In addition to this, the implementation of milk buyer policies around bull calf management in 2021 has meant more dairy bulls have become available to enter the supply chain.
Prime cattle slaughter
During the first quarter of 2023, UK prime cattle slaughter grew by 4.5% on the year to total 511,000 head, according to Defra figures. This was primarily driven by January’s kill levels, which followed elevated kill in the final quarter of 2022. A higher throughput of heifers drove the overall increase in the first quarter, continuing the trend of 2022.
Prime cattle carcase weights have averaged lighter during the first quarter of 2023 versus a year ago, likely reflecting pressures on forage and feed costs seen over the past season. How producers adapt their marketing decisions amid current market conditions and easing input costs will be a key watch point as we move through 2023.
Looking ahead, population data from the British Cattle Movement Service (BCMS) continues to suggest slightly more prime-age cattle (12-30 months old) on the ground in GB, in the region of +1% (data from 1 April). However, there are various factors that affect slaughter levels, the number of cattle available of course being just one element.
Overall, for 2023 we forecast that UK prime cattle kill will total 2.04 million head, down 1% from 2022. This is predominantly driven by lower kill in the second and fourth quarters, reflecting the long-term trend, as kill was particularly high in these quarters in 2022.
UK cow slaughter stood above 2022 levels during the first quarter of 2023, up by 5%. This followed the trend recorded in the final months of last year, when larger numbers of cows came forward ahead of the main winter housing period.
As to where these females are coming from, BCMS deaths data for females over 30 months shows that the uptick in 2022 kill came predominantly from the beef herd. So far in 2023, the data suggests that the lift in slaughter has been relatively equal from both herds.
For 2023, we forecast that cow kill will fall by 0.8% from the year before, to 623,000 head. This is against a background of expected continued contraction in cow numbers. The change in kill is expected to be particularly driven by the fourth quarter, again comparing to a particularly high kill level during the same period in 2022. There is a risk to this forecast if dairy producers were to significantly adjust their culling policies, in response to higher-than-expected milk price declines or increases to input costs.
Taking into account forecast changes in cattle kill and carcase weights, total beef production for 2023 is expected to total 898,000 tonnes, a fall of 1.7% from 2022.
Thinking ahead to 2024, cattle supplies and beef production are forecast to stabilise. GB calf registration data for 2022 showed that registrations of calves available for beef production have steadied (-0.1% versus 2021), with the decline in dairy males being balanced by an uplift in beef type animals (including dairy crosses). The declining trend of dairy bull calf registrations is expected to continue, reflecting use of beef and sexed dairy semen in the dairy herd. Indeed, registration data for the first quarter of 2023 (although still early in the calving year) shows this to be the case.
The quantity of beef imported into the UK has remained below 2022 levels during the first quarter of the year (-7%; includes fresh, frozen and processed). Cattle slaughter and beef production in the EU has been lower during the first three months of 2023 (particularly in Italy), with Ireland recording declines in production. This reflects the short-term outlook for lower production in 2023.
Ireland is expecting a slight uptick in cattle availability towards the end of the year, which could mean more price-competitive supplies available to enter the UK market. This could be exacerbated if the current price situation continues; the price premium of GB cattle to continental cattle has grown since the start of 2023. Both GB and Irish prime cattle prices have been easing over the past few weeks.
With the UK-Australia FTA coming into force very recently, initial predictions continue to highlight an expected low impact of this new trading relationship. However, we continue to monitor trade flows closely. Read our analysis for more information.
For the full year of 2023, weighing up the outlook for tighter EU supply overall and the subdued outlook for domestic demand, we forecast that beef imports will ease by around 2% in 2023.
The volume of beef shipped from the UK has also remained below year-ago levels during the first quarter of 2023 (-18%). All key recipients have taken less product, particularly the Netherlands and France. This is despite current and forecast production levels on the continent being down, and is therefore likely to be reflective of sluggish consumption levels in the EU. The general position of GB cattle prices on the continent may also be affecting our price competitiveness.
While beef shipments have fallen so far in 2023, offal exports have grown. Non-EU countries have driven this, particularly Ghana, Cote d’Ivoire and Hong Kong. While a small proportion of total beef exports, these export flows are crucial to adding value to the carcase.
Given the outlook for tighter EU supplies in 2023, we would expect export levels to return to longer-terms levels through the rest of the year. Overall, reflecting lower-than-expected trade during the first quarter, but lower production levels forecast for the continent during the full year, UK beef exports are expected to fall by around 7% for the full year of 2023.
Beef consumption trends
The below consumption forecast is on track and remains unchanged from the February 2023 release.
The continued strain on shoppers’ budgets is going to have the biggest impact on behaviours going forward. Growth of the UK economy is expected to enter an extended period of sluggish growth, and inflationary pressures look set to continue.
Beef through retail may benefit from some shoppers moving their out-of-home spend in-home. However, we predict more shoppers will be lost to cheaper proteins and carcase balance needs to be monitored, as cheaper cuts will be in most demand. Depending on weather patterns, we expect summer to ease some losses as burgers gain beef share. The out-of-home market, while suffering, may also exacerbate carcase balance issues as we predict value-led quick service retail to gain channel share for dine-out and takeaways/deliveries, benefiting burgers.
For this reason, beef volumes via retail are predicted to decline further during 2023. Levels in 2022 have tracked below 2019 every month except December, and we expect this trend to continue during this year. Positively, as we expect Christmas 2023 to look very much like Christmas 2022, roasting joints may benefit from a small boost at this time. Out-of-home, we predict beef will have the strongest recovery of the red meats. However, we believe eating out will still not return to 2019 levels, but takeaways and deliveries will remain bigger than pre-pandemic.
See further detail on 2022 consumption trends
In 2022, while the dominance of the COVID pandemic diminished, the country faced fresh challenges. Mounting costs, the energy crisis and supply chain issues were just a few of the economic factors resulting in extraordinary inflationary pressures. As a result, 59% of consumers are claiming to be worse off financially in recent months (AHDB/YouGov Consumer Tracker, November 2022).
This is impacting what food those people are buying, with 54% planning on spending less on the weekly food shop, and 60% less on eating out. While buying less is one way to mitigate price rises, we also see consumers trading down what products they buy within categories, tiers and stores.
For beef in retail, these behaviours are very much apparent. In the last year, volumes were down 9.0% year-on-year, and value down 1.1% (Kantar, 52 w/e 25 December 2022). With beef seeing average prices increase by 8.7% in the last year and an average price 12% higher than total meat, fish and poultry (MFP), it is unsurprising that beef has lost share of the MFP market.
Penetration of beef remains relatively stable, so the volume losses are coming from shoppers buying less often. This reflects the one in four consumers claiming to be eating less red meat recently and among those 54% stating expense as a reason for cutting back, overtaking health and environmental reasons (AHDB/YouGov Consumer Tracker, November 2022). Primary beef has seen volume declines of 11.3%, with roasting and steaks accounting for 66% of the losses.
Switching to cheaper proteins, such as pork and chicken, is evident, as well as switching within beef to cheaper cuts like mince. Processed beef is down 7.4%, with burgers and grills accounting for most of the decline. This reduction in sales has been seen across all cuts, and more detail can be found on our beef retail dashboard.
Out-of-home continued to see a recovery, with beef volumes up 20.1% year-on-year (AHDB estimates based on Kantar out-of-home, 52 w/e 25 December 2022). Dine-in and on-the-go volumes were 67.3% higher than a year ago due to the fact that there were more restrictions in 2021, while takeaways fell by 15.8% from their pandemic high. Dine-in/on-the-go volume gains were driven most by burgers, accounting for 37% of growth. Meat-centred meals such as steak, roasts and ribs also saw growth from an increase in consumers, especially at pubs and bars. However, AHDB estimates show that out-of-home beef volumes remain 7% lower than pre-pandemic (2019). For full details see our beef foodservice dashboard.
The beef outlook might be mitigated, if the industry:
- Encourage tasty and versatile beef dishes which play on value for money. Inspire batch cooking and filling meals, coupled with retail promotional support. This will benefit cheaper cuts.
- Capture meal occasions lost from out-of-home by inspiring treaty dinners such as fake aways or restaurant quality dine-in recipes. This will benefit more expensive cuts.
- Publicise for special occasions and events when consumers will want to treat themselves. BBQ inspiration is key during the summer months.
- Encourage consumers to continue to eat out-of-home. Opportunities in the eating-out marketinclude value for money, personalisation, indulgence, quality cues and pushing reputational factors such as health, sustainability and backing British. Takeaway/delivery is also an important trend for beef to capitalise on.
- Encourage shoppers in-store and online by improving the experience of the meat aisle, find out how for in-store here and online here.
- Addresses health concerns by communicating the health benefits of beef, such as B12 and iron.
- In the longer term, look to maintain and build consumer trust, demonstrating where farming values (animal welfare, environmental stewardship and expertise) are shared with consumers. See our consumer reputation landscape hub for more information.
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