- Background to the red meat market
- Performance
- How can the market be improved?

Background

There are about 61,000 farms with beef animals, 80,000 farms with sheep and 6000 with pigs. Some of these farms will operate as single businesses.

Over time the number of farms has declined but the average herd size has increased except on sheep farms.

The table below shows the trends in livestock numbers (in '000s).
 

Livestock numbers in the UK

The value of production has been increasing.

• The value of beef production rose by 4.9 per cent in 2007 to £1.7 billion
• The value of pig-meat production rose by 7.3 per cent to £735 million, the highest value seen since 2001.
• The value of sheep-meat production fell by 7.8 per cent to £628 million.
  

Performance

IGD’s Food Chain Centre in conjunction with the Red Meat Industry Forum has examined whole supply chains from farm to final consumer to identify improvement opportunities.

Current meat chains tend to be fragmented.

At the animal supply level there is often a lack of consistency in the source of animals used to meet the demands of a specific retailer or indeed of a specific abattoir. Different farms are often used on a weekly basis to meet the retailer demands.

Fragmentation also occurs at the processor level. Although particular plants are normally designated as the prime supplier for a particular product to the retailer, there is a tendency to source products from different plants in response to fluctuations in demand and/or supply.

At the retailer level, purchasing responsibility for different meat product categories such as fresh meat, bacon and cooked meats is typically split between different meat buyers, all of whom make independent decisions.

Fragmentation makes any consistent approach to the improvement of meat supplies along the chain very difficult to achieve.

Our work also found:

• Chains that have suppliers pushing their product onto the market have greater inconsistency and therefore cost.
• Dirty livestock delivered to abattoirs creates penalties for the producer, significantly more work cleaning and dressing the carcase, less usable meat and increased costs associated with more waste.
• Dated product specifications that should be reviewed with the customer as this can lead to a more suitable product being supplied at a significantly lower cost.
• Weekly forecast errors ranging from 21% to 121% with an average of 52% produce a massive cost impact in the chain.
• Promotional activity if not properly planned can reduce the return on capital.

The establishment of a dedicated value stream with commitment of supply chain partners to work together over a prolonged period is a necessary pre-requisite to significant supply chain improvement as it establishes a basis from which other improvement strategies could be adopted.
 

How can the market be improved?

A key feature of an integrated value chain would be the selection of a specific group of farms as dedicated suppliers for a specific retailer. These farms would specialise in growing the ‘ideal animal’ as specified by that retailer.

Production would be scheduled in relation to the retailer’s demand. Farms would be selected so as to minimise transport distances to the abattoir. Procedures would be established to monitor and feedback animal quality in order to improve farm performance.

The farms would be closely managed in their production methods, feeding regimes and veterinary regimes with the aim of producing animals which ever more closely meet the retailer’s specification.

Contracts agreed by the retailer and the processor would guarantee annual volumes for the farmers and thereby give confidence for investment in improved facilities and processes.

Currently many farmers tend to operate as fiercely independent businesses often seeing their neighbours as their chief competitors. They often have only limited opportunities to introduce new approaches either because of limited exposure to new ideas or lack of funds.

In an integrated supply chain, farmers would be grouped into one or more ‘Supplier Associations’, the aim of which would be to establish a formal and structured mechanism for continuous improvement. Some farmer groups already exist, however their main activities tend to centre on issues such as veterinary practices or negotiating feed prices.

Supplier associations could be organised either by a processor or a processor in conjunction with a retailer or cooperatively by the farmers themselves. The objective would be to share best practice in farming operations, to explore the opportunities to develop and adapt improvement approaches to farming operations.
 

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