Price rise could hit imports

An increase in the retail price of beef and lamb could result in a change in the structure of demand for imports according to a new report by EBLEX.

Today's publication 'Retail Prices and Import Demand' is the last in a series of four special studies commissioned by EBLEX to take an in-depth look at the relationship between retail prices, beef and lamb consumption and import requirements.

It follows last November's publication of the fifth edition of EBLEX Business Pointers, which looks at farm costings data for the year to March 31 2007.

This found that English sheep producers lost between 65 pence and £36 per ewe, and English beef producers lost up to £430 per animal once the Single Farm Payment was excluded and non-cash costs were taken into account.

Richard Ali, EBLEX chief executive said: "The Business Pointers figures clearly show there is an urgent need for a sustainable farmgate price if the vast majority of livestock producers are to have a future.

"Today's report builds on the findings of our price elasticity work - An Analysis of Retail Meat Demand - published last May. This showed how increasing the farmgate price affected consumer buying patterns for beef and lamb cuts.

"This latest report takes that work further, and looks at the impact an increased retail price has on total sales of beef and lamb. It shows that increasing the retail price by 10% (equating to an farmgate price increase of around 20% for both beef and sheep) does lead to a drop in total sales - which could, for example, translate into shoppers buying their usual meat purchases, but slightly less frequently.

"Our work on beef and lamb price elasticities shows consumers are more willing to accept price increases on quality beef and lamb than on commodity product. Therefore, the impact of any increase in retail price would be to close the gap between domestic consumption and production - effectively lowering the demand for commodity imports.

"Taken together, the message from the four EBLEX pricing studies is there continues to be clear room for an increase in prices at both retail and farmgate level, and that UK producers could stand to benefit from the resulting change in consumer buying patterns."