Scottish Beef Supply Chain Map - (Mar 24)

Scottish Beef Supply Chain Map

About This Sector

DEFINITION

MAIN ACTIVITIES

 Farming of beef cattle

 Livestock haulage

 The Scottish beef supply chain includes calf producers, suckler beef producers, store producers and finishers, livestock procurement businesses for deadweight sales, auctioneers, hauliers, abattoirs, primary and secondary meat processors

 Slaughter and dressing

 Rendering

 Primary processing (carcass halves/quarters, boning, preserving, chilling and packing)

 Added value processing (cuts, steaks, mince, burgers, etc.; smoked, dried and salted products)

 Edible by-products (5th quarter/offal)

MAJOR PLAYERS

Auctioneers

 10 livestock market businesses

Deadweight Procurement

 E.g., Border Livestock Exchange, Farmstock

Abattoir and Meat Processing

large

 ABP Perth, AK Stoddart, Dunbia, McIntosh Donald, Scotbeef, Woodheads

small

 Millers of Speyside, PR Duff, John Scott Meat

Scottish Beef Supply Chain

Key Facts and Figures

Scotland’s beef herd (incl. calves) was ~1.474m cows according to the 2023 Agri Census

97.9% of Scottish beef cattle are Farm Assured

In 2021, the beef sector represented 26,5% of Scottish agricultural output and is worth £706m p.a.

Prime cattle slaughter fell by 3.2% to 370,100 heads in 2022

Abattoir output in 2021 from beef, offal and hides, was £668m

>3k people are employed in primary processing of red meat. Red meat sector employs ~50k people in farming and processing

65% of revenue for

Scottish beef processors is generated from rest of UK sales

Scottish beef exports generated £53m in 2022

Beef Production Process

Deadweight procurement agencies, auction marts, performance feedback

Procurement and Feedback Added Value Processing 5

Full butchery cuts, processed products (e.g., joints, steaks, mince, burgers, pies), meals, chilling, blast freezing and packing

On Farm Primary Processing Markets

Calf producer farmers – breeding and rearing; Finishing farmers; Producers and finishers

Slaughter, dressing, primal cuts, fifth quarter offal products, chilling, blast freezing and packing

Marketing of fresh, chilled and frozen cuts of beef, processed beef products and ready meals - in UK and export wholesale, retail and foodservice markets

Primary Production

Beef Cattle Breeding, Rearing and Finishing

 1/5 of establishments in Scotland had cattle in 2021

 There are ~9,580 holdings with female beef cattle, 8,662 with male beef cattle and 8,559 with calves

 At farm level, at 174%, Scotland is more than self-sufficient in beef

 68.8% of the cattle breeding herd in Scotland is beef cattle ; 30% is dairy – the highest ratio of beef to dairy in Europe

 Decline in Scotland's beef herd showed a further 3.3% reduction in December 2022, probably due to rising production costs and uncertainty around future agricultural policy

 Cattle population in Scotland in June 2022 was 1.47m, down 3% on female beef cattle compared to the 5-year average

 The average herd size is 49 cows with 79% of cattle held in holdings of at least 50 cows

 Dumfries and Galloway remains the area with the larger number of beef cows (~120,075) followed by NE Grampian (~105,236)

 Calf registrations decreased by 0.2% for the third year in a row, to 562k

 Angus and Limousin remain the main breed groups

 Farm output from beef was worth £849m in 2020, accounting for 24.4% of Scottish agricultural output and 14.4% of UK agricultural output

 Until now, CAP subsidies have formed an important part of farm income

 17 abattoirs slaughtered cattle in Scotland in 2022 (20 with cutting plants)

 75.1% of the kill takes place in the largest five abattoirs

 At abattoir level, Scotland is more than self-sufficient in beef at 153%

 Prime cattle slaughter fell 3% to 370,100 heads in Sottish abattoirs in 2022, while the total number of cattle was 448,770

 Total beef output slipped to 163,300t (-0.6%). The value of abattoir output from beef and offal reached £733m in 2022, with £24m from hides

 Age at slaughter for males changed to more males slaughtered at 16-26 months (57.1%) while for females the share killed at 24-29 months increased to 31.4%

 The average deadweight cow price in Britain was ~50% more expensive in 2022 than the five-year average

Processing

Slaughter, Primal Cuts, Full Butchery, Processed Products, Other Added Value 5th Quarter/Offal

 The processing sector operates on low profit margins (0.2 to 1.6% in large abattoirs, much less in medium to small ones)

 Sales distribution of primary production beef, by product category in 2022 kept boneless cuts as the main product for beef processors

 For meat processing in the UK, 54.4% of the industry product segment comes from beef and veal

 For meat product manufacturing in the UK, 23.8% of products manufactured are sausages, 17.8% bacon, 17.6% hams, 10% beef or veal and 18.5% other

 A few retailers cut and process Scotch Beef products in other parts of the UK and some firms from Scotland add value, but it is not clear if they buy from Scotland. There are exceptions, such as Tarbert Fine Foods (Brown Brothers)

 Variability of age at slaughter and carcass weights going to the same chilling regime causes impact on quality

 The most concerning factors for meat processors are ensuring ongoing supply of beef, price impact on the consumer sales, eating quality and environmental impact of meat

Processing

Slaughter, Primal Cuts, Full Butchery, Processed Products, Other Added Value

5th Quarter/Offal

Markets

UK and Export

Wholesale, Retail, Foodservice, Food Manufacture

 Beef prices increased by~20% in the year to Aug 2023 (AHDB)

 Sales outwith Scotland to the rest of the UK generated 65% of sector revenue at £436 in 2022, while sales in Scotland represented 27% of the total sales (£179m)

 An above-average beef consumption in Scotland vs the rest of the UK continues with 19.2kg/person/year (1.5% decrease compared to 2021)

 UK supermarkets are the largest customers for red meat processors (52.4%), followed by food manufacturers (27%), foodservice (12%), wholesalers (3.2%) and butchers (4.5%)

 For meat wholesaling, beef and veal represent 35.7% (£4.5bn), pork 12.4% (£1.6bn), lamb and mutton 7.4% (£933m), chicken and poultry 44.1% (£5.6bn)

 For meat product manufacturing, sausages represent the biggest revenue (23.8%), followed by bacon (17.8%), pates and pastes (12.1%), beef and veal (10.2%), other products (18.5%), ham and other salted/dried or smoked pork (17.6%)

Markets

UK and Export

Wholesale, Retail, Foodservice, Food Manufacture

 Scotland accounts for 9.5% of GB beef sales

 Beef mince was the only product to increase sales in value and volume in 2023

 Scotland pays cheaper price for beef vs the wider UK market (2% cheaper), mostly due to promotion

 In Scotland, steaks have 9.8% share of beef products, burgers 10.5%, other cuts 15.7% and fillets 21.5%

 In 2022, in Scotland the volume of red meat purchased fell by 8.9% driven by a decline in purchasing frequency and decrease in volume per trip. The average price per kg increased 6.6% to £8.93/kg

 Scottish beef exports represent 8% of the total sales value at £53m

 Beef imports to the UK increased to 15% in 2022 or 234,307t, mainly fresh and frozen boneless cuts

SWOT Analysis

STRENGTHS WEAKNESSES

 Scotch Beef PGI status and whole chain assurance

 Farm accreditation is valued by consumers and plays an important role in decision making for purchases

 Reputation of Scotch Beef, Scot PGI helped deliver additional £30-40 per animal over the last 10 years

 Beef processing self-sufficiency is above 100% in farming and processing

 Proposed Medicine Hub for sheep and cattle

 Electronic traceability systems. BCMS change of cattle data to ScotEID

 The industry has been subject to tighter regulations, labelling rules and daily animal welfare checks

 The proportion of Scottish households buying beef remains slightly higher than in the rest of GB

 Meat meals still dominate the market on prepared meal products despite the growth of meat free products

 In 2022, 2/3 farmers reportedly took action to reduce GHG from farm

 Scotland’s beef herd is continuing to decline, and calving rates are lower in Scotland than rest of UK and Ireland

 Payment for meat does not incentivise quality, only yield. Around 1/3 Scottish carcasses (mainly steers) exceed customers’ target weight range specification

 Heavy reliance on non-UK labour

 Supermarket price wars squeezing producer and processor profits

 In some instances, beef is delivered to processing and packing sites in the UK and exported or returned to Scotland in a shelf-ready pack for sale here

 Low profitability of the slaughter/primary processing sector and cost of dealing with “fifth quarter”

 Scottish processors export less beef than the UK as a whole and more is exported as UK beef rather than Scotch Beef

 Negative consumer perception and media portrayal of the red meat industry

 Due to increasing demand and supply chain shortages, some supermarkets removed their 100% British beef commitment

SWOT Analysis

OPPORTUNITIES THREATS

 Broaden customer base in both UK and export markets to reduce price pressure risks, increase premiums and achieve carcass balance

 Greater automation to combat labour shortages and improve efficiency

 Technological research focusing on cost reduction, animal welfare, productivity and environmental management

 The Government has indicated that standards will be kept high in future trade deal negotiations to protect the domestic industry

 Long term agreements for frozen beef exports

 Each QA member of QMS will engage in an emissions reduction programme

 Ban on exporting male dairy calves brings supply chain opportunities

 Use R and D to build distinctiveness (product innovation in food manufacturing)

 New trade deals like Trans-Pacific trade partnership (July 2023)

 Increased input and production costs

 Labour shortages – on farm, in processing sector and ancillary services, such as vets (up to 23.6% for vets and 5.8% for a Meat Hygiene Inspector)

 Changing export certification and verification requirements, increased shipping costs, timing uncertainties and custom check delays

 Pricing pressures from UK supermarkets reducing profit margins

 Competition from alternative meats/proteins

 Forestry developments in farmland, impact of monocultives on biodiversity, ecology and employment

 Uncertainty around CAP replacement funding

 Increasing consumer concerns over health, environmental impact and affordability reducing demand for red meat

 Changes in the level of real household disposable income, affecting the amount available to spend on meat (food price inflation reached 13.1% in Aug 2022)

Sector Trends

 UK agricultural inputs cost surged for the second consecutive year by 28%, including a 113.5% rise in fertiliser cost in 2022, 50% increase in fuel costs and 30% in feed costs

 Scotland represents 11.8% of all meat processing establishments in the UK

 National Craft Butchers consultation found that more than 50% of small abattoirs are at risk of closing by 2026, due to staff shortages

 Meat wholesalers have come under pricing pressures from supermarkets encouraging bypass

 Meat prices increased considerably in 2021/22, fuelled by the rising costs of labour, energy and raw materials. Domestic (UK) price of beef is expected to increase at an annual rate of 2.8% over the next five years, averaging 256p/kg in 2023-24 (2% more than previous years)

 The focus of the industry in the next 5 years, underpinned by the QMS strategy, is on sustainability credentials, traceability and environment

 Due to vertical integration and the sheer scale of processors, many food manufacturers are bringing meat product use inhouse to achieve efficiency gains, establishing their own brands

 Foodservice customers are more interested in sourcing British meat, e.g., McDonalds and Burger King. They purchase from dedicated abattoirs to ensure provenance and quality

 Beef and veal are most vulnerable to decline in household consumption as disposable incomes decrease, as they are some of the most expensive products to produce and buy

 Concerns for health, sustainability and fears over contamination and disease will drive growth in butchers' sales

 Cost of living crisis has impacted sales of organic beef, with a reduction of sales of 12% in 2023

Sector Trends

Emissions

 Life cycle analysis demonstrates that UK beef has a carbon footprint of 23 kg CO2 equivalents per kg. This is almost exactly level with the EU average of 22.1kg carbon dioxide equivalents per kg beef

 For Scottish suckler beef, QMS6 estimated EIs for different production systems based on the AgreCalc Carbon Calculator. It reports that rearer/finisher units had the lowest intensity (18.4 kg CO2 equivalents per kg of meat) and hill suckler herds the highest (29.9 kg CO2 equivalents per kg of meat). However, the QMS EIs include fewer emissions sources than the UK and European figures above, and so they are not comparable

Sustainability

ECONOMIC

 Increase customer base to avoid pricing pressures for farmers and meat processors

 More certainty with the replacement of CAP subsidies with more environmentally focused payment schemes

 Need for more stable supply contracts for producers

 Increase market penetration of PGI Scotch beef as leading sustainable red protein available in GB

 Campaign stronger against health and environmental concerns and consumption of meat

 Stabilisation of input costs for fertiliser, feed and energy

 Increasing attention from the public has also led to rising regulatory costs for operators

 Improve profit margins within the processing sector to regain ability to invest

 Growing interest in small volume direct sales and local

• Establish brand names, key to creating customer trust and loyalty

Sustainability

ENVIRONMENT

 The Scottish Red Meat Resilience Group has committed to producing a Route Map to Net Zero by end of 2023. Aim is for industry to achieve Net Zero by 2045

 Net Zero 2045 Scotland programmes: Climate Change Plan, Agrienvironmental Climate Scheme, Farm Advisory Scotland (FAS), Monitor Farm Programme, Net Zero and Nature Restoration Plan

 QMS, AHDB and Meat Promotion Wales collated an industry toolkit of facts and figures relating to the role the red meat sector plays in three key areas: health and wellbeing, sustainability, buying local

 Aim to reduce 75% of carbon emissions by 2030

SOCIAL/PEOPLE

 Ageing agricultural workforce and succession planning required

 Difficulty attracting new entrants to beef farming

 Heavy reliance on non-UK workforce in processing

 Staff turnover and retention in primary processing an issue

Economic

Environmental

Social

Sustainable Credentials/Activities Along the Beef Supply Chain

Secondary

Research/Training

Scottish new Agriculture Transformation Programme

RUMA, antibiotic responsible use of medicine in livestock

Sustainable Producers Networks (QMS)

R and D projects (Harbro) to decrease ammonia emissions

Research on nutritional properties of alternative protein and methane reducing potential

Having positive conversations around Meat ToolKit (QMS)

Farming

ScotEID Grasscheck Programme

Agri -Env Climate Scheme

Scotch Potential

Eligibility Cattle Checker (SPECC)

Monitor Farm Programmes

Farm Advisory Service

New Agriculture Bill

Agricalc and Carbon Positive calculators

QMS Red Meat Resilience Group

Suckler Beef Climate Group (SBCS)

Scottish Beef Climate Group

Genomic data collection at tagging (QMS)

Primary Processing

SPCA accreditation of farms and abattoirs

Processing/Added

Value

QMS, AHDB and Meat Promotion Wales Industry Toolkit

Retail/Gov/Industry

ALDI’s initiative of selling Scotch and Galloway meat only

Global Feed Cycle analysis database for life cycle assessment of ingredients

ABP’s Carbon Trust Standard

Bakkavor pledge to eliminate single use plastic by 2025

Meat Eating Quality Strategy 2022

The Scotch Butchers Club

ABP’s Nurture Nature Programme / Advantage

Beef Programme

Dunbia investment on Highlands Meat Facilities (new deboning and packaging tech)

Development of “Red

Meat Industry Net Zero Pathway”

Raising the Steak Campaign (QMS 2022)

Farming Footsteps Programme

The Scotch Beef Club

“Meat the Market” Groups “Make it Scotch” website and cookery demos (QMS)

IAAS qualificationauctioneering, welfare and management

Back British farming Campaign (AHDB)

Quality Assurance/Policy/ Regulation

QMS, RSPCA, SSPCA, FSS, Export Health Cert., Food Information REG., Food Safety Act., Red Tractor, BRC, Beef PGI Research Institutes

Moredun, Agri-Epi, SRUC, Meat Trade journals (market insight)

Scottish Beef Supply Chain

Primary Production

Trade Bodies

QMS, SAMW, AHDB, SFMTA, Scottish Beef Association, Scottish Craft Butchers, NFUS, National Federation of Meat and Food Traders, BMPA

Breeding, Rearing and Finishing

Primary Processing Secondary Processing

Slaughtering and Primal Cuts

Full Butchery

Processed Products

Export: wholesale, retail and foodservice Markets

UK: processors, wholesalers, retail and foodservice

Strategic investment in AV processing, cold stores

Develop UK and export markets – greater customer range for premium price and carcass balance

Need to combat labour shortages

Pricing pressures Narrow customer base Consumer health and environmental concerns

Supply Chain

Issues

References

 The Scottish Red Meat Industry Profile, 2023 Edition

 Scottish Agricultural Census, June 2023

 Putting Our Steak in the Ground

 Meat and Poultry Deep Dive Report: GB Retail, Dec23

 Meat Processing in the UK

 Meat Product M anufacturing in the UK

 Domestic Price of Beef (April 2023)

 Tackling Antimicrobial Use and Resistance in Food Production

 Meat Wholesaling in the UK

 Prepared Meat Manufacturing in the UK

 QMS Beef Sector Strategy 2030

 Scotland: The Choice for Premium Red M eat, 5-year strategy

 Quality by Name, Quality by Nature - A study into red meateating quality

 Positive Impact, Positive Results- QMS I ndependent I mpact Report

 Celebrating the Positives of Red M eat-QMS Toolkit

 Greenhouse Gas Emissions: Agriculture | AHDB

 UK Beef Carbon Footprint Is EU Average | The Beef Site

Quality Meat Scotland

Scottish Government

Scottish Red Meat Resilience Group

The Knowledge Bank

UK I ndustry Report, IBIS WORLD, 2023

UK I ndustry Report, IBIS WORLD, 2023

UK Business Environment Report, IBIS WORLD

FAO,Veterinary Medicine Directorate, 2022

UK Industry Report, IBIS World 2023

UK Industry Report, IBIS World 2023

Quality M eat Scotland

Quality M eat Scotland

Quality Meat Scotland

Quality Meat Scotland

Quality Meat Scotland

 Scottish Environment, Food and Agriculture Research Institutes (SEFARI) Fellowship Blog - 14 July 2020 (nfus.org.uk)

*March 2024 Reviewed regularly as new reports and statistics become available.