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Beef supply chain absorbing cattle price increase
Thursday, 8 April 2021
GB cattle prices have strengthened considerably throughout the coronavirus pandemic. However, the same cannot be said of beef retail prices. According to data from Kantar, average beef retail prices have risen by around 3% in the past year, and AHDB’s own supermarket price series records a drop in prices for the cuts it follows.
Early in the coronavirus pandemic, we modelled the effect of increased mince sales on carcase values. Looking at a typical carcase breakdown from this model (see table below), last year the retail value of a beef carcase was approximately £5.90/kg. At current retail prices, the value of a carcase broken down in the same way would now be closer to £5.70/kg, a drop of £70/head on a 345kg carcase.
In contrast, the latest all prime average deadweight price is £3.96/kg, compared with £3.36/kg a year ago (prior to the carcase balance-related price drop). So, farmgate prices have increased 60p over the past year, while those at retail have remained the same or even fallen slightly. The beef supply chain has absorbed the difference in these price movements.
Beef demand through retail channels has been strong over the last year, driven by the closure of the foodservice market. As such, demand for British beef has also been particularly strong. As the UK unwinds its lockdown measures over the coming months, it is reasonable to expect that volumes of imported of beef will increase, to serve the foodservice market as it reopens. Despite tighter domestic supply-side conditions, we may see support for British cattle prices lessen.
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