Supermarket goes short of beef Last week Sainsbury's, the UK's third largest retail chain, was reported to have had to source emergency supplies of beef when its usual supplier ran short. UK & NZ sheep industry in decline UK pig industry on brink of collapse

30 January 2008 -- A UK supermarket has moved one step closer to the looming protein shortage while farmer groups around the world are all singing the same song - improve the prices before it's too late.

NFU Scotland, which consists of sheep and beef farmers from across the country, has warned retailers that significant shortages of product are on the horizon unless better prices arrive soon. The concern is that farmers are set to sell their breeding stock as rising costs make businesses unsustainable.

But the shortage of beef is not confined to Britain. Irish cattle are becoming more difficult to source and South American beef is facing tougher restrictions on export.

With fertiliser, feed and fuel prices all escalating, NFUS has huge concerns that the production of both beef and lamb could be about to suffer a serious drop unless prices start to reflect both the tight supply situation and rising costs.

Figures produced by the Scottish Government revealed drops in both breeding sheep and cattle numbers since June 2007.

NFUS Livestock Committee Chairman Kelvin Pate said the major supermarkets do not want to be making the same mistakes they did in the dairy sector, where they presided over a downturn in domestic production which jeopardised their supply.

"The production costs on farm have gone through the roof. Fertiliser prices have virtually doubled, grain shortages have driven up feed costs and the impact of fuel prices has been well documented.

"In the beef market, the supermarkets have traditionally used foreign sources of cattle as a safety net. But the most common exporters are facing problems themselves.

Irish cattle are scarce and their prices are higher than they are here, Brazil is facing new EU controls and Argentina has imposed domestic controls on exports.

The price of beef is starting to move but the momentum needs to increase.

Farmers are facing big decisions this year on whether they keep cows to calve for another year, or put them down the road and they need positive signals from the supply chain if they are to stick at it.

"The situation in the sheep sector and pigs sector is equally serious. If retailers and processors don't work closely to recognise exploding costs and reducing supply, their customers are going to start seeing the consequences on the shelves, as Sainsbury's apparently found out last week."

Peter Morris

Representatives from the National Sheep Association, who were visiting New Zealand last week, were adamant that changes needed to be made in order to save the sheep meat industry in the UK as well.

NSA CEO Peter Morris said in the UK farmers were in dire straits.

"We cannot keep this up. We're going out of business.

"... we are at the mercy of the supermarkets and we are going broke fast.

"If sheep farmers continue to disappear at this rate, where are the supermarkets going to get the lamb from?"

The number of breeding ewes has dropped by a staggering number in the past few years in the UK and it seems unlikely that there will be a turnaround in national flock figures - only a dramatic price increase back to the producer is likely to halt the decline.

In New Zealand, the Meat Industry Action Group has been particularly vocal over the past six months.

John Gregan

MIAG Vice-Chairman John Gregan, of South Canterbury, said the low lamb prices that New Zealand farmers had been receiving had proved the incentive needed for many farmers to get out of sheep.

Many had converted their farms and still more had sold their farms altogether, often to dairying.

And, the rush to dairying is not over yet with still dozens and dozens of sheep farms set to be converted next season.

Meanwhile, the UK pig industry is in "a pig of a mess" with most industry commentators warning that it is on the brink of collapse.

Just last week two leading pig producers went out of business - DRS Pigs and MCB Sow Company.

Together, the companies have over 6000 sows with 50,000 progeny, and 90 contract producers/finishers. Industry analysts estimate the companies' production, around 120,000 piglets a year, represents 2% of the industry.

As one industry commentator said: "it's not that long ago that there were 800,000 sows, then the number dropped to 400,000 and it seems likely that it will halve again.

"I think it will and I think we'll end up getting our pork supplies from Holland."

Ironically, a recent pig industry promotion in the UK did succeed in increasing prices. Only thing was, the price went up to the cosumer, but reports indicate that no extra money made it back to the producer.