Butchers have no room left to move on price

Will steaks become a luxury item?

Stock and Land Beef
Aa

Retail beef prices creep up, but will consumers turn away?

Aa

BEEF retail prices are starting to creep up with butchers saying they have no room left to move as cattle prices continue their incalculable upward run.

Processors have also sounded warning bells that supermarkets have been absorbing costs on behalf of the consumer to an extent that is not sustainable.

It's uncharted ground for Australia's beef industry. The long-held retailer assumption of a price ceiling whereby consumers turn away from beef has been smashed by COVID but no one knows how much more household budgets can weather.

Agribusiness analysts from ANZ say the rise in retail beef prices has outstripped any other food category in Australia, leading to talk beef will soon be considered a luxury item.

Deputy chair of the retailer arm of the Australian Meat Industry Council Trevor Hill, a South Australian butcher, says there is already evidence of substantial change in consumer demand.

The spend on beef is still the same, he says, but shifts have been made to keep the per-head cost of feeding the family at a reasonable level.

"Prime cuts are being bought in far less volume and households are changing to a grazing plate style, rather than the traditional Australian steak-per-person style," Mr Hill said.

What that may mean for the domestic beef market, and the need for full carcase utilisation to maintain profitability across the supply chain, is yet to unfold.

"We are entering a record price era for retail beef and there are so many unknowns, especially with COVID thrown in," Mr Hill said.

"We haven't seen what unemployment is going to do to consumer demand, or what the economy is going to do from here.

"But the only way for retail prices to go is up, because that's the way the cattle market is going.

"Retailers have so far absorbed a big portion of higher prices because of the fear of consumer pushback. We face the consumer every day.

"But they've reached the point that can no longer happen. If we don't move our prices up now, we won't ever recover."

ANZ's October Commodities Insights report shows the price of a number of major foods in Australia has risen during the pandemic but it hasn't phased consumers.

Beef has epitomised this.

The shut down of restaurants and cafes has seen the counterintuitive result of beef consumption actually rising strongly despite price increases, director of ANZ's Food, Beverage and Agribusiness Insights Madeleine Swan said.

ALSO READ:

For many years, the price of beef remained remarkably level, regardless of drought, livestock prices and the low herd numbers, the ANZ report showed.

Over the past three years, however, since the drought broke and livestock prices took off, one of the largest rises in recent history of retail beef and lamb prices has followed.

In the past year alone, retail beef prices have risen over 13 per cent, while lamb prices have risen 2pc, ANZ reported.

Longer-term analysis shows retail prices tend to move in tandem with saleyard prices, which means price tags in meat cabinets have more upward movement to come, ANZ concluded.

Early signs are consumers might be shaping up for higher food prices generally.

ANZ says the long-term decline in the percentage of household budgets spend on food has certainly plateaued and in fact it was increasing even before COVID.

Mr Hill said he lifted beef prices $2 to $3 a kilogram in the past week in his shops and had 'not one comment' from consumers.

"Generally speaking, in the country beef prices are 5-7pc cheaper than in the city, so we believe consumers will be willing to take on at least that level," he said.

Start the day with all the big news in agriculture! Sign up below to receive our daily Farmonline newsletter.

The story Butchers have no room left to move on price first appeared on Farm Online.

Aa

From the front page

Sponsored by