Back domestic industry and keep supply steady in 2016 - HCC Chair

Supermarkets can make a positive contribution in 2016 by ensuring a steady and consistent flow of lamb and beef to their shelves and avoiding “the shattering shards and spikes of oversupply that puncture prices and splinter our industry,” HCC Chairman Dai Davies told a representative audience at the Royal Welsh Winter Fair.

“Collective responsibility for delivery is the only way forward and it is vital that our local butcher’s shops and, crucially, our supermarket outlets step up to the plate and stock, promote and sell our PGI branded products,” said Mr. Davies.

“I believe our multiple retailers increasingly understand that they have to balance a moral responsibility for the domestic economy with a commercial necessity, to maintain a consistent supply to their customers and avoid, however tempting, the short term opportunistic returns that provoke the shattering shards and spikes of oversupply that puncture prices and splinter our industry. Collectively we all have a role in finding a workable supply solution.”

He said the average Welsh farm is around £7,000 worse off just because of the variations in the Sterling-Euro exchange rate alone. “Two years ago, the pound was worth 1.16 euro; today it is 1.43 euro. We are getting short-changed. Each sheep on your farm is worth £60 today, instead of the £72 it was at Winter Fair time, two years ago.”

Speaking at Hybu Cig Cymru-Meat Promotion Wales’ breakfast meeting to open the Llanelwedd event, he commented on the devastating impact of the global economy on the steelmaking industry in Wales.

“We know only too well inside the agricultural industry the turbulence created by living and working in the global marketplace. Apart from the hugely influential exchange rate issue, supply fluctuations and market manoeuvrings have allowed cheaper imports, principally from New Zealand, to replace our premium, PGI branded products for the prime places on the supermarket shelves.”

He said, nevertheless, the global marketplace also offered huge opportunities for the advancement of high quality, premium products such as PGI Welsh Lamb and Welsh Beef. “Industry experts say there will be a little less production in Australia and New Zealand in 2016 because of adverse climate impacts and that may have a positive effect on prices here for a while.”

Mr. Davies said the Welsh industry had three weapons to help keep prices stable and work towards longer term sustainability. “Our greatest weapon is our farmers. In Wales, we produce premium lamb and beef that competes with any in the world and that’s because of the resilience, experience and diligence of our farmer champions.”

However, the stern challenge facing each farming business was the need to deliver at a viable and sustainable cost of production. “The cold truth is that this industry is unsustainable unless we can produce at a profit within market price. HCC’s latest statistics on farm cost of production, which will be available in more detail in a few weeks, show that the challenge remains as stark as it has ever been, with overall costs rising and a percentage of  Welsh farms unable to even cover costs of production let alone returning a profit.”

Exports may be comparatively cheaper because of the Euro but they remain crucial to achieving this broader sustainability, increasing demand by around 30 per cent.

“HCC’s role is to facilitate exports. Exports underpin domestic prices. Without exports, Welsh Lamb prices this year would have been substantially lower.”

He also praised the unity within the industry and the backing for HCC’s marketing efforts across Wales. Citing theRemoving the Barriers to Electronic Recording of Sheep Flocks in Wales project - a comprehensive sheep industry project that encompassed 1,716 businesses, more than a quarter of the Welsh ewe flock.

“In this case, the industry benefited from RDP money, funded by Welsh Government, EU and farmers. This is partnership working at its best; Government, EU, HCC and grass roots industry responding effectively and immediately to deliver transformational change for the future well-being of the red meat sector and wider rural economy.”

He said the industry was at the beginning of an era of necessary transformational change if it was to achieve commercial and environmental sustainability. “HCC is perfectly placed to facilitate this change, positioned between Government and industry, ensuring that demanding outcomes are met and aspirational ambitions are achieved so that we are able to take advantage of the exciting opportunities that are ahead of us in the coming years,” concluded Mr. Davies.