Farm to retail price spread -Lamb

Transcription

1 Market Bulletin November Lamb, Beef and Pork Farm to Retail Price Spreads This month s Market Bulletin will focus on how the retail prices spread for lamb, beef and pork have changed since the start of the year, and how this compares with. The farm to retail price spread is the difference between the farm price and the retail price of food. In most cases this figure is expressed as a percentage share of the retail price. Lamb Since the turn of the year the substantial increase in lamb prices has resulted in producers receiving a higher share of the final retail price compared to the same period in previous years. Lamb producers began the year receiving almost 56% of the final retail price during January when the retail price was 706.6p/kg and the farmgate price was 393.3p/kg. As the tight supply situation in the global lamb market continued - resulting from lower New Zealand production farmgate prices increased. GB supplies of lamb were higher than usual and a number of markets turned to GB to fill their requirements. By April farmgate prices had risen considerably to 516.8p/kg and as the Easter marketing period began prices rose significantly as processors sought to secure adequate supply. With the farmgate price in April almost a third higher than in January and retail prices only 2% higher at 722.7p/kg, this month represented the point during the year at which farmers received the highest proportion of the retail price, almost 72%. % Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: AHDB Farm to retail price spread -Lamb In May the farmgate price was at its highest (530.2p/kg) and retail prices also increased to 772.6p/kg,which resulted in a slight drop in the proportion of the retail price that producers received to 69%. Since this point declining farmgate prices and fairly steady retail prices has resulted in a downward trend in the proportion of the final retail price that producers have received. The latest figures for September showed that since May farmgate prices have fallen 28% to average 380.7p/kg while retail prices have fallen only marginally to 768.9p/kg, this has meant that in September producers received - on average - slightly less than 50% of the retail price. Beef The situation for beef has also reflected the movements of the farmgate price. In January producers were receiving 49% of the final retail price when the retail price was 572.6p/kg and farmgate prices averaged 281.4p/kg. In February farmgate prices declined 2% to 276.8p/kg while retail prices fell 3% to 556.6p/kg meaning that producers received almost half of the final retail price. Since then both the farmgate and retail prices have generally increased. From March through to August farmgate prices increased from 283.0p/kg to 316.7p/kg. During this time the average retail price increased from 569.2p/kg to 591.9p/kg meaning that producers had gradually received a greater percentage of the total retail price.

2 % Farm to retail price spread -Beef Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: AHDB The average farmgate price for September was 326.1p/kg, 16% higher than at the turn of the year, while the retail price was 3% higher than the Janaury average at 592.5p/kg as retailers appeared wary of increasing retail prices given the current economic climate. As a result for September beef producers received on average 55% of the final retail price. Pork In January pork producers received on average 136.7p/kg, which was 38% of the final retail price. This fell to 37% in February as the farmgate price declined by over 1% and the retail price declined slightly. % Farm to retail price spread -Pork Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: AHDB As pig prices improved in line with seasonal trends and outperformed any increase in retail prices the best month for producers was June when they received 41% of the final retail price, with farmgate prices averaging 152.2p/kg when the retail price stood at 371.9p/kg. Since then retail prices have changed little while producer prices have decreased by almost 5% to average 145.3p/kg in September, as a result producers received 39% of the final retail price.

3 Consumer Statistics Retail sales of lamb drop while beef and pork sales improve -52 w/e 04/09/11 Pork Lamb Beef % Change Average Price Volume Expenditure Beef and pork increase total red meat market share while lamb market share declines - 52 w/e 04/09/ Beef Lamb Pork All Other Meat Series1 Series2 Series3 Supermarkets continue to gain red meat market share at expense of Butchers & Others -52 w/e 04/09/ Total Butchers All Others Supermarkets

4 Cattle Prices Production Statistics p per kg lw Welsh prime cattle prices Prime cattle prices at Welsh livestock markets have fluctuated over the past few weeks reaching a year high of over 187p/kg in week ended 8 October. In week ended 15 October cattle prices eased, however, at 181p/kg the prime cattle average was 35p higher than in the corresponding week last year After reaching a high of 126p/kg in week ended 3 September, prices for cull cows in week ended 15 October slipped 9p to 117p/kg. The fall was more marked for dairy bred animals which dropped by 15p to 98p/kg while beef bred animals were down 8p to 124p/kg Source: AHDB Deadweight cattle prices in England and Wales have strengthened in recent weeks. Since mid-september the average steer price increased 4p to average 326p/kg in week ended 15 October, heifer prices were up a similar amount to average 324p/kg, with young bulls up 2p at 312p/kg. Slaughterings 000 head 18 Welsh cattle slaughterings Welsh cattle slaughterings in August were 9% up year on year at 11,400 head. Production for August was only 6% higher than in at 3,400 tonnes, this was a consequence of lower carcase weights Source: Defra UK prime cattle slaughterings in August were almost 2% above year earlier levels at 156,000 head. This was largely driven by a 10% increase in steer throughputs and a 4% increase in heifer slaughterings. In contrast, young bull slaughterings were significantly lower, down 21% on the year as the reduced male calf registrations in began to impact on the numbers available for slaughter.prime cattle slaughterings in England and Wales were up 1% compared to the corresponding month last year while in Scottish plants slaughterings were at a similar level to the corresponding month a year earlier. As a result of the increased slaughtering, total beef and veal production in August increased by almost 4% compared with year earlier levels to 68,000 tonnes. EU Prices per 100 kg dw Source: EU Commission Average EU cow and steer prices O3 cows R3 steers O3 cows R3 steers European male cattle prices have recorded improvements over the course of the third quarter, and continuing the trend for were significantly above year earlier levels. Strong demand from exports, as Turkey continued to take increased shipments, coupled with lower domestic and imported volumes have tightened supplies considerably. In the third quarter of, R3 steer prices recorded considerable growth, the EU average increased by 20 since the end of June to reach a peak of 357 per 100 kg in week ended 9 October. This has been driven by an increase of over 40 in the UK reference price which reached a peak of 380 per 100 kg in week ended 9 October.

5 Trade (000) tonnes UK trade in beef Jan-Jul In July UK exports of fresh and frozen beef totalled 10,500 tonnes, an increase of 23% on year earlier levels. Much of this increase was driven by significantly higher shipments to the two main markets of the Netherlands and the Republic of Ireland, up 63% and 38% respectively. The continued rise comes as overall beef and veal production for the month fell 2%. Of the smaller markets there were declines in exports to France, Italy and Belgium, down 21%, 43% and 5%respectively. The emergence of a number of new markets continued with several countries going from zero shipments in recent years to now taking some product. Imports Exports Imports of fresh and frozen beef for the month were up by over 1% as increased volumes were sourced from a number of markets. The Source: GTIS, HM Revenue & Customs two largest markets of Ireland and the Netherlands increased their shipments by 8% and 33% respectively. Australia doubled the volume of shipments, with imports from Uruguay and New Zealand up 25% and 15% respectively, however, these three markets only accounted for 5% of total imports. Household Purchases (%) Beef Performance (Volume) in Wales, 12 w/e 04/09/ Household purchases of beef in Wales increased by 2.4% to 5,195 tonnes in the 12 weeks to 4 September. Volume sales of stew and mince increased by 18.5% and 5.3%, respectively, while sales of frying/grilling beef decreased by 6.1% and roast sales decreased by 2.6%. Expenditure on beef in Wales during the same period increased by 5.4% to almost 32.6 million compared to the same period of and the average price increased 2.9% to 6.27/kg. Sheep Prices p per kg lw Welsh SQQ lamb prices Source: AHDB The volatility in Welsh lamb prices continued throughout September,the SQQ average for the monthwas 8p lower than in the previous month, at 165p/kg, although this is still above year earlier levels. Since the start of October prices have improved, which is attributable to increased demand from the export market. In week ended 15 October the SQQ at Welsh auction markets was 170p/kg, 8p higher than at the end of September. Cull ewe prices have remained fairly level since mid-september, however, in the latest week they have shown some slight improvement, increasing almost 2 on the week to average 51.30/head.

6 p per kg dw Source: AHDB GB lamb overall SQQ Deadweight lamb prices in GB had eased, despite some brief revival in mid-september, the SQQ declined to 373p/kg in the first week of October. Driven by the recent resurgence in the livestock market as export demand picked up, in week ended 15 October the SQQ increased almost 8p on the week to average 380.9/kg. The SQQ was 30p up on the year as supplies remained tight in the broader context. Slaughterings 000 head Welsh total sheep slaughterings Source: Defra Total Welsh sheep throughputs in August were almost 2% higher than year earlier levels at 370,000 head. Higher carcase weights contributed to mutton and lamb production being 4% higheryear on yearfor August at just under 6,800 tonnes. In England and Wales lamb carcase weights were more than 2% higher on the year for August and adult sheep carcase weights were up almost 5%. Throughputs in England and Wales indicated that adult sheep numbers fell 7% to 153,000 head while lamb throughputs declined 4% to 950,000 head. As a result mutton and lamb production in England and Wales declined 1% as the higher carcase weights offset the fall in the number of animals slaughtered. EU prices per 100kg dw Source: European Commission Average EU heavy and light lamb reference price Heavy lambs Light lambs Heavy lambs Light lambs The EU-25 heavy lamb price was little changed over the past four weeks after easing five cents in week ended 18 September to 4.86/kg dw (422p/kg). Prices have improved marginally in recent weeks, to reach 4.90/kg dw (423p/kg) in week ended 9 October. This improvement came despite the UK reference price continuing to decline, dropping 10 cents since early September to average 4.31/kg dw (372p/kg) in week ended 9 October. Irish prices are also lower than they were in early September falling to average 4.11/kg dw (355p/kg) in week ended 9 October. Both the declines in the Irish and UK prices are attributed to ample supplies of sheep being met with a steady demand for product, particularly in France where their domestic production has been well placed to meet demand. The most recent uplift in the British liveweight and deadweight trade - due to higher export demand - should feed through into further increases for the EU reference price. The French reference price has continued to improve, up approximately 20 cents since early September to average 6.19/kg dw (534p/kg) in week ended 9 October. The rise in the French price along with increases to the Spanish and German prices was the main driver behind the overall increase in the EU average. Heavy lambs in the EU context are defined as lamb carcases weighting more than 13kg. Light lamb prices have continued their seasonal improvement over the past four weeks with the EU-27 average 14 cents higher at 6.64/kg dw (574p/kg) in week ended 9 October. An increase of over 30 cents in the Spanish reference price was the main driver behind this rise as the Greek reference price fell by over 20 cents and the Italian price remained static. Light lambs in the EU context are defined as lamb carcases weighing less than 13kg.

7 Trade (000) tonnes UK trade in sheep meat Jan-Jul Imports Source: GTIS, HM Revenue & Customs Exports UK imports of fresh and frozen sheep meat during July, at 6,100 tonnes, were 8% lower than year earlier levels as supplies remained tight and domestic demand remained subdued. New Zealand product accounted for two thirds of total imports despite volumes being 9% lower year on year, as lower production lead to declining supplies available for export. Of the main suppliers of sheep meat the only country to record increased shipments was Australia, who continued to fill some of the gap left by New Zealand, volumes in July were 26% higher than in July and accounted for a fifth of all sheep meat imports during the month, compared with only 14% a year earlier. The only other nations to record increased volumes into the UK during the month were France and the Falkland Islands. However, volumes from these countries accounted for only a very small part of total imports. In July exports of fresh and frozen sheep meat, at 7,600 tonnes, were 7% higher, on the back of a 6% increase in production across the month.shipments to France continued to suffer and declined 8% while volumes to Belgium also fell year on year, down 40%. More than offsetting these declines were increased shipments to the Republic of Ireland, Germany, Italy and Hong Kong. Exports to Vietnam went from zero in July to over 200 tonnes, while volumes to Norway went from zero to nearly 150 tonnes. With both Belgium and France taking mainly chilled product total exports of fresh sheep meat fell 2%. With the growth markets of Ireland, Vietnam, Norway and Hong Kong mostly requiring frozen product total volumes of frozen sheep meat were up 86%. Household Purchases (%) Lamb Performance (Volume) in Wales, 12 w/e 04/09/ Household purchases of lamb in Wales decreased by 27.4% to 1,154 tonnes in the 12 week period to 4 September. Volume sales of leg roasts, mince, chop steaks, stew and shoulder roasts decreased by 46.4%, 43.8%, 24.2%, 10.2% and 5.2%, respectively. Expenditure on lamb in Wales during the same period decreased by 13.9% to 9.7 million compared to the same period of, and the average price increased 18.6% to 8.37/kg. Pigs Prices GB Deadweight Average Pig Price p per kg dw Source: AHDB/BPEX The monthly average DAPP stood at p/kg in September, 3p lower than in August. The fall continued the normal seasonal trend, with the supply of pigs for slaughter remaining high whilst demand has not kept pace. Nevertheless, the September figure was still 4p higher than a year earlier. During the first half of October, the DAPP has stabilised and was p/kg in week ended 15 October. This was driven by increased demand from processors in the run up to Christmas. This stabilisation has come earlier than in recent years, when the DAPP has typically continued to decline into November. The decline in weaner prices, which began in mid-july, continued through September. The average price during the month was 41/head, 2.50 lower than in August. As with deadweight prices, the weaner price stabilised during October and in week ended 22 October the average price of a 30kg weaner was 40.03/head.

8 Slaughterings 000 head Welsh pig slaughterings Welsh pig slaughterings between January and August totalled 23,000 head, up 11% on year earlier levels; with increased carcase weights pig meat production was up 16% year on year at 1,500 tonnes. In England and Wales during August clean pig slaughterings totalled 601,000 head, up 8% on the year.the total for the year to August totalled 5 million head, an increase of 7% year on year. 0 Source: Defra EU prices per 100 kg dw The general stability in the EU average pig reference price, which has been apparent since May, continued through September, with little sign of the seasonal decline which would normally occur at this time of year. This was driven largely by export demand from non-eu markets, particularly in the Far East. The September average EU price stood at 155 per 100 kg dw. This was around 11 higher than in September In sterling terms, EU prices have fluctuated more, due to exchange rate movements. However, the falling UK price has meant that the gap 140 between it and the EU average has fallen from 11p in late July to 135 around 7p in September. This is less than half the premium which 130 existed over the previous two years. 125 J F M A M J J A S O N D Reference prices in most member states have also been largely stable. In most cases average prices in September were less than 2% Source: EU Commission different from those in August. Amongst major producers, only prices in Italy and Sweden increased. Italian prices continued the upward trend evident since Easter, reaching almost 190/kg by the end of September, the highest in the EU while Swedish prices in September were almost 5% higher than they were in August. Trade (000) tonnes Average EU pig meat reference price UK trade in pig meat Jan-Jul Pork exports Pork imports Bacon imports Source: GTIS, HM Revenue & Customs Total imports of fresh and frozen pork during July were 8% lower year on year at 27,000 tonnes. Whilst shipments from the largest supplier, Denmark, rose by 5%, quantities from the other major sources, Netherlands, Germany, Belgium and Ireland, all fell. This fall contrasted with the situation through the earlier part of the year, when imports increased, and total pork imports for the year to date were up 4% to 213,000 tonnes, mainly due to substantially increased shipments from Denmark. During July exports of UK fresh and frozen pork increased by 23%, compared with a year earlier. This was driven by rising shipments to countries outside of the EU, which more than doubled and accounted for 30% of the total. Shipments to EU-27 countries rose by 3% despite decreases in the largest markets, Germany, the Republic of Ireland and the Netherlands. These were offset by strong growth in shipments to Belgium, France, Sweden and Poland. The growth in exports to non EU markets was fuelled by considerable increases to the Far East, notably Hong Kong and China, which between them accounted for over a quarter of total exports in the month.

9 (%) Household Purchases Pork Performance (Volume) in Wales, 12 w/e 04/09/ Household purchases of pork in Wales increased by 1.4% to 3,774 tonnes in the 12 week period to 4 September. Volume sales of loin roasts, chop steaks, leg roasts and belly increased by 71.9%, 8.6%, 2.6% and 2.3%, respectively. However sales of shoulder roasts were down 31.5%. Expenditure on pork in Wales during the same period increased by 7.8% to over 18.7 million compared to the same period of, while the average price increased by 6.3% to 4.94/kg. Latest News Welsh red meat action plan is hitting the targets to improve industry The second annual review of an ambitious action plan setting out a strategy for the long term viability of the red meat industry in Wales has found that it continues on course to meet its targets. The strategic action plan was launched in with a vision to ensure a profitable, efficient, sustainable and innovative Welsh red meat industry that responds competitively to ever changing market trends and benefits the people of Wales. The second annual monitoring report has now been published by Hybu Cig Cymru and the Welsh Government which gives an updated view on how work is progressing. Alun Davies, Deputy Minister for Agriculture, Fisheries and Food said: "This review is excellent news for the red meat industry and evidence of the sterling work that Hybu Cig Cymru is doing across the whole supply chain, from farm to fork. "As well as marketing Welsh Lamb and Welsh Beef, HCC also encourages farmers to improve the standards of their livestock which in turn delivers higher prices in the marketplace and a better standard of meat for the consumer. This joined up approach is clearly paying dividends for everyone involved in the supply chain." HCC Chairman Dai Davies said: "The Strategic Action Plan is not something that sits on a shelf gathering dust. It is a living document, constantly referred to by the organisation to ensure we are meeting the targets we have set." Among the targets achieved over the last 12 months are: Publication of Wales' first red meat environmental roadmap encouraging beef and sheep producers to reduce their impact on the environment. Establishment of the Welsh Lamb Club, encouraging leading restaurants to promote Welsh Lamb on their menus. More than 40 top London restaurants had joined during the period of the monitoring report. Portfolio of nine research and development projects maintained by HCC, focussed on supporting the Welsh red meat industry. A total of 33 projects supported by HCC through the Rural Development Plan for Wales to disseminate information to the industry on a wide range of issues, including genetic improvement and product quality. Quality Management Procedures training undertaken by HCC in 20 small and medium sized abattoirs. Financial support offered to farmers for the testing of Johne's Disease and Bovine Viral Diarrhoea in cattle. More than 400 young farmers joined HCC-organised red meat development programme open days, discussion group meetings and events on behalf of Farming Connect. A further 23 study tours allowed hundreds more farmers to examine farming practices both at home and abroad to share and adopt best practice with colleagues in Wales. Series of publications produced giving advice on a healthy diet and lifestyle for both children and adults. A number of seminars for teachers and health professionals, giving information about the role of red meat as part of a healthy, balanced diet.

10 TV star Adam leads impressive line-up at HCC annual conference A leading television presenter, an Australian expert on the sheep industry and a top European agriculture official will join Wales' food and farming Deputy Minister for a major conference on the future of the Welsh red meat industry in Cardiff next month. Red meat promotion agency Hybu Cig Cymru will hold their annual conference at the Vale Hotel and Resort near Cardiff on November 10 th. The line-up of speakers include farmer and presenter of BBC1's top-rated rural affairs programme Countryfile, Adam Henson; Dr Alex Ball, Research and Development Manager with Meat and Livestock Australia; and Gwilym Jones, a member of the EU Agriculture Commissioner's Cabinet. They will be joined by Welsh Government Deputy Minster Alun Davies who will deliver the keynote speech. "This is an excellent line-up of speakers who are all experts in their field," said HCC Chairman Dai Davies. "This conference will provide all those connected with the Welsh red meat sector an opportunity to hear specialists discussing a wide variety of topics, all of which are of great interest to the farming and processing industries." Adam Henson is a Gloucestershire farmer who is also a highly popular presenter on Countryfile, the BBC's flagship rural programme. Viewers have been gripped by his insightful reports on the current state of farming, including his personal battle to protect his herd against bovine TB. Dr Alex Ball is a key figure in the Australian meat industry and manages their research and development programmes aimed at improving breeding stock. He will also discuss how Meat and Livestock Australia looks after marketing of their products. Gwilym Jones is a high ranking EU official and a member of Agriculture Minister Dacian Ciolos' Cabinet. He will talk about the latest proposals to reform the Common Agricultural Policy. Also speaking will be HCC's Market Development Manager Laura Dodds who will provide the latest information about HCC's promotional campaigns both at home and abroad, as well as William Evans and Rob Cumine - both HCC scholars - who have returned to Wales after studying farming techniques in South America and Australia. Minister predicts rocky road for CAP reform UK farm minister Jim Paice has admitted that European Commission proposals for CAP reform face a rocky ride both from the UK and other member states. He told a press conference at the Crop World conference in London on Monday, October 31 that there had "been a pretty poor response to date" for the proposed reforms. "Many people don't like them, and there have also been many different viewpoints on the contents to date," Paice said. "One common theme is that there is a need for simplicity, but a lot of the suggested changes lack support." Further clarifications are awaited from Brussels on points of policy, but Paice strongly hinted there would be slippage in the timetable. "Nobody expects there to be an early agreement," he told delegates. "It is going to be a very protracted arrangement." He added: "This is the first time we have had all 27 member states and also parliamentarians involved. How do we get to 2015? An interim policy looks increasingly likely." The UK position is that much greater emphasis needs to be focused on removing trade distorting subsidies.