Wednesday, June 3, 2020

Meat industry stresses importance of domestic supply and key workers

The coronavirus pandemic has emphasised the vital role played by domestic supply and the contribution made by key workers in food production, according to the latest market commentary by Quality Meat Scotland (QMS).

In response to the coronavirus, some meat businesses have moved towards on-line or phone ordering with either home delivery or collection services.

Many food service businesses are also looking at ways they can perhaps re-open as takeaway businesses offering home delivery to generate some income.

“These innovations and adaptations will, over time, broaden the demand for meat,” said Stuart Ashworth, Director of Economics Services with QMS.

“Nevertheless, it is likely to be some time before restaurants and bars return to normal and when they do, it will be some time before consumers feel confident enough to eat out.”

In the public sector meat demand is also compromised. While demand from care homes, prisons and military establishments remains normal, there are fewer hospital patients, and without schools, colleges or pubic buildings, like sports halls and museums, demand is reduced.

Similarly contract caterers serving large offices and business or sport and recreational events are trading less.

“Until such time as these businesses and activities return to normal, the balance and volume of meat cuts will remain compromised,” said Mr Ashworth.

The current pandemic has demonstrated how quickly a market can turn.  In the UK, this was apparent through the disruption to export activity that contributed to a sharp fall in sheep prices.

In the US, where several abattoir and food processing plants have stopped working completely due to coronavirus cases among workers, the farmgate price for cattle and pigs has fallen significantly because there are a reduced number of buyers and capacity to process livestock.

Indeed, there are some concerns in the US that stocks of meat in cold store will run out before some of the meat processing factories re-open and in some parts, there will be shortages of meat.  Meanwhile, market-ready animals are backing up on farms.

“In the UK, we have not seen processing plants close, although many have slowed down, but the comparison with the United States illustrates how important those working in food processing establishments are and emphasises why they are key workers as much as medical workers,” said Mr Ashworth.

During the early stages of coronavirus in China, the shortage of staff at ports disrupted the arrival and distribution of imported meat.  Once they returned to work, the period of disruption to usual trade flows resulted in legacy problems for meat exporters to China, such as accessing the containers and ships needed to get product out there.

One reason why the wider food supply in the UK has not been significantly disrupted is possibly the fact that cross-channel ferries are running well below capacity, operating largely as freight only transport with minimal disruption at ports.

However, with the financial viability of some ferry routes and businesses being threatened by the reduction in passenger travel, the UK has made financial support available to these companies to secure their future.

“What the above discussion illustrates is that irrespective of coronavirus, the strategic importance of food security that comes from access to domestic supplies and the availability of skilled workers in the food industry must be better appreciated,” said Mr Ashworth.

Similarly, according to Mr Ashworth, discussions over Brexit must fully recognise the impact of disruption to trade, whether that be through tariff or non-tariff barriers on the financial sustainability of the red meat supply chain.

“Given the additional planning required to manage current and future coronavirus disruption, recognition must also be given to the limited amount of time available to put procedures in place that a hastily concluded negotiation could result in,” he said.

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