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2022 and beyond will go down as being among the most challenging periods for Scotland’s red meat sector since the industry faced the foot-and-mouth outbreaks of 2001 and 2007 and the emergence of BSE in the 1980s.
“Rising costs, continuing labour shortages and the challenge to hit net zero targets, head a hit list of pressures for farmers, processors and retailers to address over the coming months,” said Ian Bentley, newly elected president of the Scottish Association of Meat Wholesalers (SAMW).
“As we approach the return of the Royal Highland Show next week there is also much to celebrate, of course, not least the quality and provenance of Scotland’s iconic red meat. I am really looking forward to seeing the agri/food industry once again putting its excellence on display, which is a welcome return to normal. However, we cannot ignore the spiralling operational costs, energy hikes, and supplies crisis facing all parts of the industry at present.
“SAMW member companies have been battling to maintain staffing levels for at least the past 18 months, if not longer, with no sign of an easing in pressures in this area. This has inevitably raised labour costs, leading to depressed processing margins which has been exacerbated by the energy cost surge of recent months. I know many others are in the same place, including farmers, but that doesn’t change our sector’s bottom-line returns.
“If ever we needed to work together as a whole-industry supply chain, then this is it. By that, I mean farmers, processors, retailers and government talking to each other and properly understanding each other. We have a great product in Scotland and good lines of communication between the representative bodies that seek to drive the industry forward. While each sector will obviously seek to look after its own in the face of such a challenging period, there will be no prizes for allowing any one part of the supply chain to benefit at the expense of another.
“As processors, we desperately need strong livestock supplies at one end and a rewarding retail chain at the other. We appreciate that farmers need the same to apply to their businesses. We both need as much support and helpful pragmatic governance as possible. As tackling the climate change challenge takes centre stage, the pivotal role that livestock farming and processing plays in safeguarding our rural communities is in danger of being overlooked. Sometimes, we feel it is an uphill battle to secure support and understanding so we can collectively work together to maximise our sector’s potential to the benefit of producers, workers and consumers.
“Attention also needs to be given to the big rises being applied to inspection costs and the potential risks attached to the UK’s light touch approach to import checks. While our members face highly complicated and costly export checks, meat imported into the UK enjoys unrestricted access to our market. This provides our competitors with a commercial advantage and leaves our livestock prey to major disease risks which could easily be avoided.
“Hopefully, the return of the Royal Highland Show will enable us to ‘kick start’ a new round of meaningful discussions, geared to addressing the enormous challenges that lie ahead. Despite these challenges, however, we believe firmly in the future of Scottish red meat and desperately want to maximise the industry’s potential.”
UK Government dithering on the implemention of essential Sanitary and Phytosanitary (SPS) controls, which are needed to protect both public and animal health relating to meat imports, is exposing Scotland’s beleaguered pig sector to potentially devastating disease risks says the Scottish Association of Meat Wholesalers (SAMW).
“Unchecked imports are adding to the very real threat of African Swine Fever (ASF) being introduced into the UK from infected stock sourced from Europe, or via travellers bringing contaminated pork products into the country,” said SAMW Executive Manager, Martin Morgan. “The UK Government’s decision to once again delay the full implementation of import controls, possibly until next year, is a gross neglect of the health of Scottish pig industry.
“Pig producers urgently need their national Government to step up and take action on this issue. Otherwise, we could easily be facing catastrophic problems.”
For anyone missing SAMW’s annual New Year Lunch, which usually took place on the second Friday of January, here is a look back at our 2019 event.
The lack of a workable and practicable visa scheme, through which to recruit skilled staff from EU countries, coupled with ever rising costs from all directions, has placed Scotland’s red meat sector in an extremely challenging position as we head towards 2022, says the Scottish Association of Meat Wholesalers (SAMW).
While acknowledging that COVID-19 created a massive ‘beyond control’ challenge for the Government in 2021, SAMW says member companies were badly served by Westminster over the past 12 months as regards a range of pertinent issues.
“Maintaining our workforce at a level that keeps the business viable has been the over-whelming concern for my members throughout the year, and, with virtually no real help available from Westminster, businesses have been left on their own to fight a lone battle to find skilled workers,” said Alan McNaughton, SAMW President. “I include the emergency visa arrangements that were put in place in October this year in my criticism. This so-called temporary solution completely missed the point in the first place and hasn’t delivered to any significant degree in the two months since being put in place.
“Member companies desperately need a long-term solution, tailored to address a serious shortage of skilled workers, not a sticking plaster response designed to get us through Christmas and the New Year. Frankly, it didn’t deliver in the short-term and is unlikely to be any better next year. As such, the early months of 2022 will be dominated by continuing labour supply problems, accompanied by rising costs from all quarters.
“The inevitable consequence of a high demand for labour is that wage rates are rising across all industries, energy bills are increasing sharply, our compliance costs continue to climb, while the price we pay for our raw material is rocketing skywards. The cost burden our members endure is rapidly becoming unsustainably high. A market correction is looming which may well mean that an explosion of costs and prices at the retail level will be inevitable at some point in 2022 with processors, wholesalers and retailers being forced to apply cost increases to their end products. Official economic forecasts for the UK are already quoting inflation reaching 5% next year and there is no way the production, processing and retailing of red meat can be exempt from such pressures. It could even be argued, in fact, that food inflation in some primary areas is long overdue in the UK.”
In addition to pressing for a visa solution for recruiting EU workers, which is actually capable of meeting the industry’s needs in 2022, SAMW is also seeking greater understanding and support from Government on a number of other issues.
The Scottish pig sector faced major problems this year, the most damaging of which, aside from its own labour pressures, was the loss of export licences
to China which has caused huge difficulties up and down the supply chain. While the UK’s four pigmeat export plants, including Brechin, are now in the process of having their licences reinstated, there are still significant concerns over the ongoing shortage of butchers, which the new visa system is not easing, and the backlog of supplies on-farm which steadily built up during the peak of the sector’s crisis.
Exporting red meat in general to established customers within the EU has been a massive challenge for smaller, niche product, businesses over the past year. Some operators have given up on trading opportunities which were previously extremely valuable and easy to manage. If Ministers are serious about boosting our export volumes, then a helping hand to provide a low-cost route to Europe and beyond is urgently required.
The campaign to restore Scotland’s BSE status to negligible risk (NR) continues to demand attention. The NR status, on which Scotland led the UK, was lost in October 2018 following a single BSE case in northeast Scotland. This has cost member companies around £90 million in lost revenue to date and needs to be urgently restored. The Association is campaigning for this happen in 2022.
SAMW is also requesting some financial support from the Scottish Government towards extra costs incurred by the mandatory requirement for members to install CCTV cameras in abattoirs, a requirement which cost one medium sized plant approx. £20,000, to quote just one example. Writing to the Cabinet Secretary recently, the Association drew attention to the fact that while mainstream processing businesses have not been awarded a single penny of support to cover their CCTV costs, grants of up to £5,000 were awarded to island plants. In addition, SAMW also highlighted that some farmers have been awarded financial support under the Sustainable Agriculture Grant Scheme to install CCTV in their livestock pens. This needs to be rectified and support made available to all parts of the supply chain that are subject to this new statutory requirement.
Another support imbalance concerns the fact that while red meat processors face full-cost recovery for official controls, as delivered by Food Standards Scotland (FSS), other food sectors, such as fish processing, enjoy the free provision of similar controls.
“Twenty years ago, there were there were over 30 meat plants operating in Scotland,” said Mr McNaughton. “Now we have only 14 plants processing livestock, with many parts of the country being without an abattoir in the local area. While there are different reasons for this shrinkage, the constant burden of compliance costs on our members has been a major contributory factor, especially while our competitor industries in the protein supply market continue to be spared from paying any of these charges. This needs to change in 2022.
Positive global message
“To conclude on a more positive note, however, we are encouraged that the holding of COP26 in Glasgow enabled our Scottish supply chain to showcase the natural, grass-based qualities of Scotland’s red meat production to a global audience. It allowed us to distance ourselves from the intensive feedlot image on which so much negative anti-meat publicity is based. Educating the consumer on our environmentally friendly production systems must continue if we are to ensure our product is marketed to maximum advantage.
“It’s good to be reminded what a great product we have and to be able to remind our customers that beef, lamb and pork from Scotland is produced to such high standards of public health, animal welfare and climate sensitivity, and that these products are a vital part of a healthy balanced diet.”
Post Brexit export problems (Published: 2/2/22)
MacDuff 1890, a family business dating back to the 19th century, recounts its trading experiences in the post Brexit era. Andrew Duff, Director, MacDuff 1890, writes:
Effectively, since 1 January 2021, we have been unable to export our products to our long established and loyal customers in the EU. Why is this you may ask, well in the run up to leaving the EU, the UK Government gave precious little consideration to the impact that moving to 3rd country status would have for smaller businesses like ours, who have to rely on grouping products together with other exporters into consolidated loads to help minimise transport costs.
It quickly became apparent, however, that such groupage was fraught with problems once we embarked on post Brexit trading. Huge issues arose in relation to our EU exports with the groupage method which worked so well before, suffering severe delays as physical and documentary checks were conducted on all vehicles when entering the EU.
The extra bureaucracy, red tape and paperwork involved in such exports, alongside the delays with border checks etc., made it uneconomic for us to continue shipping product into the EU at the time. Many companies we had previously used as hauliers to export via the groupage method into the EU, were then refusing to accept our goods as they faced the very real risk of getting stopped for hours, if not days, at the border. And, just to rub salt into our wounds, we had to pay a vet to sign our export health certification, a step was added yet more cost to the process.
As we are a small business, we had to use groupage, as we cannot fill a whole wagon ourselves. Larger businesses who could fill whole wagons, and so avoided groupage problems, have still experienced issues with Brexit, even though they were still managing to get product into the EU post Brexit.
Furthermore, due to us not having a distribution hub in the EU, delivering to individual addresses/butcher shops across different countries in the EU made it a severely difficult task. Towards the end of 2021 there was only one company that was successfully exporting products of animal origin from Scotland to the EU.
So, what did we do instead?
With the EU effectively a no-go area for business, we decided to diversify by branching out into retail last year. We successfully launched an upmarket butcher shop within the centre of Edinburgh last summer, which supports a lot of local suppliers as well as selling our prime beef, lamb, and pork. We have also started to ship products out to Hong Kong through a UK based company that has links with Hong Kong. This is proving an exciting venture. However, the irony of being able to ship product halfway around the world but not to mainland Europe is not lost on us.
Is there any light at the end of the tunnel on the exporting front?
As of today, we finally have two companies that say they can potentially export smaller consignments to the EU. We are now working out costs and all the administration that surrounds this option so we can try get it set up and going again. So, potentially, MacDuff 1890 will soon be exporting its native breed beef to the EU again, although there are doubts at present as regards additional cost factors and the length of time since our customers have dealt with us. Whether or not they will be willing to pick this business up again, as easily as it was pre-Brexit, remains a key question.