Quality Meat Scotland Podcast
Spanning topics including market trends, brand communications and industry development projects, the Quality Meat Scotland podcast will draw together sector experts with farmers and stakeholders to hear their views and the all-important facts about the Scottish Red Meat industry.
Quality Meat Scotland Podcast
The Supply Chain Story - QMS answer your questions on current drivers behind beef prices in Scotland
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In our latest QMS podcast episode, we’re tackling the pressing issues, opportunities, and trends that shape our industry.
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Here is a link to all episodes of QMS's podcast https://qmscotland.co.uk/news-media/qms-podcast
Welcome to the QMS Podcast, where we explore the issues, opportunities and trends shaping Scotland's red meat industry.
SPEAKER_02In the QMS focused episodes, we'll be speaking to the Chief Executive, Chair, Board members and market specialists about the topics that matter most to the sector. From market trends and policy developments to practical insights and supply chain challenges.
SPEAKER_01This podcast is your opportunity to put your questions directly to QMS and to industry experts. If there's something you'd like us to cover in a future episode, you can submit your questions through our social media channels or anonymously using the link in the episode description.
SPEAKER_02So this is the first of our QMS-focused episodes. So every month we'll be having episodes that are specifically bringing in QMS-focused speakers. So we're starting on a high bar this time, where we have got Sarah Miller, the Chief Executive from QMS, along with Ian MacDonald, who is the market intelligence manager. So Sarah, welcome on to the podcast.
SPEAKER_03Hi Kirsten, how are you doing?
SPEAKER_02Good, thank you. Good. So we've got a range of questions to throw into our discussion today. We have asked people to submit some questions. So we have a mix of some submitted and some of our own questions as well. Just as a start off though, I saw, and I just want to highlight it, I saw um look lately in the press that Kate has done very, very well in an award. So I wonder if you want to speak about that.
SPEAKER_03She has, and I'm so, so proud of her. It was such a special occasion because this is a little known fact, but Kate has actually just about been the longest serving chair of QMS ever. So she's been chair of QMS for eight years, I think it has come August, September time this year. And if you think about what's all happened in that eight years, you know, we were we just kept come out of the EU exit vote when Kate came on as chair. We've had we have had the exit from the EU, we've had COVID, we've had multiple crises across different sectors. So it's it's rare for one person to have you know carried on through all that. And I think that was what was reflected. Um we were down in London at the National Women in Agriculture Awards, it's a national award, not just in Scotland, um, for ambassador of the year. And Kate is QMS chair, I think she's done a really, really strong job of representing the levy payer. And you know, Kate comes from a hill farm in in Peebleshire. You know, she's she's she's carried that voice, you know, she sits on things like the Trade and Agriculture Committee, so that's sitting among some of the, you know, some of the leading trade negotiators and trade lawyers in the world representing what the needs of farmers in Scotland are to maintain strong trading conditions. And I think you know that that's what it really comes back to. She's done so much for the sector and has always been an ambassador for you know what I'd call the the normal levy payer, the normal, and it's very relatable. Um, I think she said she'd she'd literally been lambing a chibi at hog that morning um before we went down to London. So there's nothing more sobering than trying to catch one of those wee things, um, particularly as as we call them the tail enders at lambing time when you're just about through. So um, yeah, no, we were delighted to be there and to be able to celebrate with her. Um, so yeah, that was a really special night.
SPEAKER_02Yeah, brilliant recognition for such a stalwart of the of the industry, I would say.
SPEAKER_03Um, hopefully that's recorded. She'll kill me.
SPEAKER_02So Kate is the chair. If we if we go forward to the board, how do you go about selecting your board members?
SPEAKER_03So QMS is not going to call us a strange organization, but we are. I have to preface every conversation I have with most normal people is that we are not a normal organisation. So we are what's called a non-departmental public body, but we are not funded by government at all. We are 100% funded by farmers and levy payers. So anytime I speak to anyone in government, they say, Oh, that's a pretty abnormal arrangement. And anytime I speak to anyone, you know, from other trade organisations, they go, Ah, so you're not just a standard trade organisation type organisation. But actually, what I think is as chief executive is it probably gives us the best of both worlds. Um what that means is board members for QMS they are appointed through Public Appointments Scotland. So it is the Cabinet Secretary or the Minister who appoints board members to QMS. What that means is that it's a skills-based application, and so it's it's done on merit. There's an application process, there's a SIFT, there's an interview. Uh, that interview is Kate sits in the interview panel, and there's other external from across government and other organisations sit on that. So, what it means for us as an organisation is that we we can't go out and say, you know, I want Kirsten Williams to sit on our board. Um, but it does mean that we have a very fair and transparent recruitment process that hopefully means that we have really strong individuals able to support the work of QMS that are appointed on in it.
SPEAKER_02And they're they're made up then of people within the industry, so people who are probably professionals working for other companies as well as well-wearing farmers, I guess. And is it a paid position?
SPEAKER_03So just go back to the the who sits on the board. By law, 50 for 50% of our board members have to be levy payers. So that's actually set into the statutory instrument that governs QMS. Um, and a levy payer is anyone who is from a farming business or from a processing business because that is where the levy is paid from. Um, in terms of who's around that table, we've got a really strong mix of beef farmers, sheep farmers, we've got processors, we also have people from you know with experience in marketing and communications, um, we've got experience for people in trying to think who else is right. For example, Carrie Ruxton is a very well-known dietitian and nutritionist. So for me, it's about having the right experience for people around that table. So when we're thinking about you know, what do we need to do to help support the Scottish red meat sector going forward? You've got that depth and variety of experience, um, both lived and technical. Um and it is it's it's not paid in the traditional salaried form, so there's a day rate, and that day rate is set by the Scottish Government's public appointments team, and they're paid for you know the day's work that they do within that.
SPEAKER_02Okay. So if we think about QMS then and what what you're currently doing, so there's there's obviously quite a lot of discussion around the Scotch premium at the moment with store producers selling through the market and maybe not feeling that they're getting the the reward for the Scotch premium. What's your thinking on that, Sarah?
SPEAKER_03I think QMS is an organization, you know, our our our our strategy strapline is Scotland a choice for premium red meat. And if you look at where we are positioning that product, both in retail and in export markets, it is being positioned at the premium end of the market. What we can't control and have never been able to control is what I'd call the market dynamics. And we know that over the last five years, what has been a kind of 20-year-old problem of declining cattle numbers has turned from what I would call a trickle into a bit more of a surge. And over the last two years in particular, we've been more vocal on that, on actually we have reached a point of critical mass, and we need to be able to back our Scottish producers so that we have an industry long term to be able to invest in that industry and invest in that product going forward. When it that comes to the Scottish premium, that the problem we have around livestock numbers isn't purely a Scottish problem. We know that the actually, but if you look at the three nations in the UK, there's been cattle lost both in England and Wales at a slightly faster rate than we have in Scotland. So when all those market dynamics and everything comes in, and you look at availability on farm, what we know is that there are other parts of the UK that are tighter at the moment than in Scotland. Now, that and that's where some of that market dynamic is driven from. It doesn't mean that you know we've we've lost our credibility on sort of quality credentials or we've lost our kind of credibility on premiumization, but it is something that we need to get back to in terms of looking at this as a three-nation problem and making sure that we are backing producers on all sides of the border because if we are just producing if if Scotland becomes the only part of the UK producing cattle in particular, that that doesn't help to you know to nurture and to be able to have a really strong Scotch brand that we then want to position as the premium brand across the UK and in export markets. It's probably quite a long-winded answer, but hopefully it's kind of meandered through that. It's quite a complex area.
SPEAKER_02It's interesting because you you can tell me if I'm completely wrong here, but um is Aberdeen Angus, is it the second most known brand in the world? I think is Coca-Cola the first, and then Aberdeen Angus is the second. So they they've obviously kept their premium and a brand that's very, very well known. How does QMS make the Scotch brand to compete with that on a global basis?
SPEAKER_03So I I always say, you know, we gave the world the Aberdeen Angus cow, you know, Scotland is the home or the Aberdeen Angus. Um I've not heard that one about it being the most kind of second, second. I know that Aberdeen Angus is obviously the most prevalent breed of cow or cattle across the world. I think when it comes to premiumization, and particularly when it comes to that brand recognition, you need to have the volume of product behind it to be able to market the product. So using Aberdeen Angus as a really good example, the Aberdeen Angus brand has been able to grow as it has moved into some of the major cattle-producing countries in the world, across Australia, across America. One of the challenges, you know, bringing it back to Scotland, as we've seen volumes decline, we have moved from being sort of major exporters into some markets into more minor exporters. And what that does is if you've not got the kind of volume of product to go into a market, then you're you're almost, you might be in high-end food service markets, for example, but that's not giving you that same brand visibility as it would be if you were in um retail and export markets, for example. So I think that's a really good kind of correlation between making sure that we have the volume of product, because if we do allow our critical mass to continue to drop, that brand visibility just gets lower and lower and lower.
SPEAKER_02And it's interesting because there we've got our critical mass is declining, but our price is also declining. And you would generally think the price should be increasing as things get low in supply, the demand should get higher. What's QMS doing about that?
SPEAKER_03Yeah, so that's a really good, um, and this is something that we're we're we're holding quite a bit of thought on at the moment. And and so we know the market has softened in the first half of 2026, and part of that has been driven by consumer spending. Um, there's quite I'm not going to quote the statistics at you because I think Ian's probably got that coming up. Um, but mainly driven by the the war over in the Middle East, we know that consumer spending has been challenged and we know that consumer confidence is challenged. What that has then resulted in, along with the crap weather we've had in the first part of 2026, is really soft retail sales. Um those retail sales, and and and again, the other piece to come into this, we know that beef price has gone up at retail level. There's also a lot of promotional activity that has stopped or slowed. So if you went back 18 months, if you walked into any retailer, you would probably say steak meat on promotion for particularly on a Friday, Saturday night, you know, in the dine-in for £20 deals that they have. A lot of that has either slowed or stopped. Um, so volumes, particularly of steak meat, have have steadied going through retail, and and that has what has kind of come back to that carcass imbalance and sluggish beef price and like say a combination of weather, low consumer spending, leading into soft retail sales, not just across red meat, kind of across everything is experiencing in this, that's what's kind of brought us into that position right now, and this isn't just a kind of issue in the UK, we're seeing this across the whole of Europe. So, whilst beef is tight, if you've still got sluggish sales, and I think chicken, chicken is the winner at the moment, and that's purely driven by where it is in a pricing um level at the moment, um, that could change because chicken's obviously more exposed to increases in cost, particularly coming from um um fuel prices going up and from input costs. But at the moment, if you look at the the kind of price differential between chicken and red meat, that is if particularly if you know if you're got a constrained budget because you're having to spend more of the fuel pumps, um that's that's the protein that seems to be winning.
SPEAKER_02So that's that's probably the why. Can I push you on the what? What is QMS doing? What are we doing?
SPEAKER_03So actually, so we have I mean every every year at QMS, we so we made a big change probably four years ago into how we deliver our marketing campaigns. So if you go back to 2018, we used to do a burst of beef marketing, a burst of port marketing, and a burst of land marketing, and that would be what we would do throughout the year. What we did about four years ago was instead of doing individual species bursts, we we combine that now into one always-on marketing campaign. So 365 days of the year, there's a kind of integrated marketing campaign, but at certain points of the year we upweigh that and downweigh that, and that's just to make best use of media spend. So we have a major campaign launching on the 9th of June this year, um, which is very much aligned to the summer of sport. It's going to be on TV, it's going to be across social media, it's going to be on the kind of wider media. Um, I think we've got some partnerships with some of the um TV magazines and newspapers again. So our upweighted campaign will be starting on the 9th of June, focusing on, like, say, the summer of sport and tapping into the fact that we know the football is going to be on the TV, people are going to be looking to hopefully get the barbecues fired up if the weather improves, and that kind of casual dining and making that as a really good opportunity to promote the three brands collectively, which also means that when we're doing that, we're making good use of our media budget to do that. So it should be quite impactful. We're also in discussions with both processors and retailers about actually what are the pinch points on certain cuts. Is there anything more bespoke or specific we can do to try and get parts of the carcass moving? Um there's also quite a few inward and outward missions, export missions. So, Tom and Gordon, who work in our business development team, they had quite a big one over with one of the processors in April time. Um so that was an inward mission they did talking about. Um, so they visited some farms, visited a processor, they did a bit of a demonstration on this is what the Scotch brand means. They're going back out to that country that they came in from to do some store walks. It's one of the retailer from an export country to some store walks and look at actually what does that marketing activation look like in country? Um we've got a couple of other inward missions coming in around the time of the Highland show as well. So all of this activities is our bread and butter, and none of it ever stops, and it's just keeping to, like, say, what we can do, and also making sure that we are communicating up and down the supply chain, you know, the very real realities. Um, we spent a lot of time over the last 18 months really, you know, focusing on that critical mass piece and and making the case for increased livestock numbers in Scotland. And actually, as part of that, and part of the work that we did with producers on that, we we need to see market stabilization. Um now, some people might call that a pipe dream, some people might say, God, we've been talking about this for years. But actually, the reality is, and and and you know, Kirsten, you'll know that as a producer yourself, if you're operating in a very uncertain market, it doesn't give you confidence to invest, it doesn't give the next generation confidence when they are making decisions about what they want to do, you know, to come back to the farm. So actually, if we are serious about backing producers in Scotland and livestock producers in Scotland, it is something that we we need to have a grown-up conversation on and say, okay, how can we do this better? Because the way it's been operating for the last hundred years and probably beyond, I think probably doesn't work for the years going forward, particularly when you consider how volatile um that external operating environment is just now.
SPEAKER_02I think you're 100% in that we definitely need to have a fair and sustainable pricing strategy. And I don't know, does anything need to change within the supply chain to allow that?
SPEAKER_03Oh, good question. I mean, I'm gonna for a time in my early career I worked in the grain trade. Um now I know that obviously grain and livestock are very, very different, but when I was working in the grain trade, I was working with um milling wheat growers growing kind of group one bread wheats, um biscuit wheats, and more malting barley. And I often reflect that the trading arrangements between livestock, particularly at the finishing end and the grain trade, they're they're not dissimilar in terms of how the deals are done. You know, you know, a buyer phones you, what's the price this week? You neither do a deal or you don't. The difference with the grain trade is that you have something you can fix in. So if you've got, you know, I'm just gonna use for an argument's sake, 100 tons of wheat, you know, you can hedge some of your cost of production through selling forward. Now, I'm not saying that bringing that into the livestock sector is the right answer, but there's a way that a producer can manage their costs and manage their risk. I think if we strip all this back and start talking about how we manage risk, I think that's a conversation that the whole supply chain probably needs to get together and say, okay, we're operating in a volatile world. Retailers want to be assured that they have product on shelf because you know, number one rule of a retailer, if you've not got it, you can't sell it. So if a retailer wants to have red meat products on shelf, the easiest place, particularly in the UK, that they could buy it from is in the UK. So backing British, Scottish producers makes sense for retailers, particularly with complex supply chains like red meat. So if that for them is a risk, how can we help move that risk all the way through the supply chain so that no one part is exposed in the way that they are at the moment? Because it feels like at the moment we go from farmers, you know, having a tough time as they are just now, to another part, you know, whether it's processors, whether it's retailers. And actually, we all just want everyone to make a margin. So that's probably quite a long-winded way of answering that. But I think there needs to be a conversation about how we share that risk better, particularly when we're in that volatile world. And I think the other thing that I kind of come back to as well is throughout my whole career and probably your whole career, Kirk Kirsten, this whole area of you know, the environment, reputation, welfare, you know, there has been growing asks from the consumer, which are very valid, you know, or of producers, you know. And uh and I think when we are producing products in the UK and they're going into UK retail or into export markets, you know, we can be assured that those products are produced to a high standard. Now that comes with a cost, but that cost is justified in the fact that you're not exporting that risk that you're suddenly going to find that you know your beef on your shelves has been produced by people being paid below a minimum wage, or you know, which is a risk when you're buying from imported because you don't have the same controls or the same um sort of legislative protection that we do in the UK, which whilst it puts a cost on business, it also takes away that risk.
SPEAKER_02Quite interesting what you're saying there because uh newspaper headlines are around capping the cost of food in supermarkets. And I guess we know our basic payment is there to help keep food um affordable. It's been there since the war, hasn't it, to keep food affordable. But we do have that that other part to it, the high animal welfare, knowing where your food has come from. There's a greater story, and and having that sustainability side as well. What is your thoughts and views on on those headlines of keeping food cost capped?
SPEAKER_03I think if we strip it back and go where where why have governments started talking about food price caps? And governments will be talking about that because of all the data that's showing that consumer spending is going down. And and that, like I said earlier, is because of the war in the Middle East, the the kind of cost, that embedded cost, particularly of fuel prices. That is hitting families' budgets, and they they are responding to what people will be saying. Now, the challenge, and again, this is kind of almost going back to so one of my pet subjects. If we go back to the 1980s, in terms of a family's budget, we used to spend more of our family's budget on food. Part of what's happened over the years, and a really good example of this is when I was growing up, we had four TV channels. You paid one TV license that was probably what 50 quid, maybe, maybe 50 quid back in the 19, the 1900s, the 1990s. Now, you know, you you know, even in our household, you know, we would pay the TV license, we've got Netflix, we've got Disney Plus, we pay for a couple of extras so I can watch Yellowstone and things like that. So you know, that that one cost code for a family's budget has now increased to probably twofold, if not threefold. So what that kind of comes down to is families' budgets are probably under more pressure because we've got more choice. And when we come back to values and principles, food is such a positive driver for other positive change across the country. Now, if we look at the environment, what we eat, so we all eat three times a day. What we eat in those mealtimes can help to maintain the landscapes, it can help to sequester carbon, it can help to make healthy, you can keep us healthier. And all of those things governments are also paying for in other ways because we're not really thinking about how the food system could have a bigger impact. So I suppose what I'm trying to say is as a food price cap for individuals, I can understand for families who are under strain at the moment, you know, why they are sort of saying, oh gosh, it's food prices that need to come down. Personally, I think that we're not thinking about this question in the right way because, like I say, food is such a powerful tool. I don't think a price cap would achieve it, I think you would have bigger problems in other areas if you just started to say we're going to limit the price of goods. You then also increase the risk of imports coming in at a lower price point, which if we're trying to reduce carbon emissions from production in the UK, why would we then increase our imports of products at a higher emission base? You know, it doesn't make sense. We're not thinking about the actual problem that we have. So it is a difficult one though, because like I say, we know families you know that are struggling, and as everyone is, and that includes people that we listen to this and farming families. We know that the war in the Middle East has increased costs to everyone.
SPEAKER_02It's very interesting. It's maybe a podcast for the future about food trends and such like, because shoppers' habits have changed so much as well. We've got the likes of the rise of GLP and people looking for more protein, which should really help our industry. But then you've also got with the with consumers feeling the pinch, you've also got a lot less people eating out, which actually then hurts us, don't you? And I guess it there's a huge piece around education and knowing what ingredients to buy and how to cook those ingredients, which probably for our listeners on here are thinking, well, we we know, but there's a lot of people who really don't know how to cook. And I guess that's QMS. You guys spend a fair bit of your budget on education as well, with schools and such like.
SPEAKER_03We do. We've got Abby Goldie, um, our community um support kind of education worker. So she she's been absolute superstar. She is out in the community just I think she's been about three times this week um already. Um, she does a lot of work with the Royal Highland Education Trust, so out with schools, out with young people, but we've also moved some of that work into what I call more community-based. So we've been using rugby clubs, football clubs, different sports teams as a way of trying to get people to think about what they eat in a slightly different way. And you know, you just mentioned there the cost of eating out. That can be as simple as sort of showing how easy it is to make a steak meal at home. Because actually, if you go out for a steak in a restaurant, you're probably paying what, £45 now, between £35 and £45 for a steak. Whereas you can go to a supermarket for a butcher, a butcher or a butcher, um, for less than half of that, buy a steak and recreate it at home and still get the kind of tasty food that you would get if you were out, um, but recreating it at home. So I think that community work is so important, and particularly in educating and and engaging the next generation where protein fits in. And that was why you know we really wanted to, it was Aileen Martin, you know, was really passionate about trying to move some of that education work out of schools and into the community. So that's something that we have invested in quite heavily over the last few years because we know that that's that it's a longer burn, but it's it's worth it, and particularly when you get things like GLP ones coming in because people have already then got a bit of education and knowledge about actually what they should be eating.
SPEAKER_02Brilliant, great stuff. Thank you for uh talking to us today, Sarah, and uh we hope to speak to you again soon.
SPEAKER_03No problem, Kirsten. Good to speak to you.
SPEAKER_01So I'm joined today by a well-known face in the QMS team, is Ian McDonald. Ian, how are you?
SPEAKER_00Yeah, um I'm I'm good, thanks, Robert. Um, yeah, so um I should probably say that my job title is Market Intelligence Manager, and yeah, I've been uh analysing the markets since 2010. So yeah, I've seen a lot of ups and downs in the past uh 16 years.
SPEAKER_01It is amazing that change in the last 16 years. What we've seen probably in the last three years is quite incredible. But if you think back to where we were, do you remember what the price of beef was in 2010?
SPEAKER_00I think it was about 270 a kilo or something when I started. So yeah, it's it's it's uh gone up quite a lot in recent years.
SPEAKER_01It's maybe a sign that we are getting old too, but it doesn't seem you know it's incredible how much it's changed to to where we're at. And and shortly we'll be discussing a bit of pressure on that price, but to think that that price starts with a six, having at the start of your career started with a two, it's quite quite remarkable. But so how did you how did you get into your role in QMS? How did you land up in the job you're in?
SPEAKER_00Yeah, so I studied economics at Edinburgh University and uh shortly after graduating in a financial crisis, I was basically desperate for a job. And I s the economics office at Edinburgh emailed everyone that had graduated with this job opportunity, and I was like, oh, actually that looks that looks really interesting. Uh, because I I'd been expecting to go into the finance sector, uh, into the city, that kind of thing. Um but yeah, but just saw this and I was like, oh, that looks kind of interesting, and the rest was history.
unknownYeah.
SPEAKER_01And you don't have a farming background?
SPEAKER_00No, not no not at all. So I did I didn't know what a steer was or a heifer on my first day. So yeah, it's quite a quite a learning curve. Learning curve, yeah, yeah. But yeah, love love the sector. Yeah. So so interesting, and obviously lots of lots of great people as well.
SPEAKER_01Yeah. No, it's it is an it's an amazing story, actually. And it's funny how that the 2008 financial crisis probably drove a lot of people into careers they didn't expect. And it was uh and maybe maybe we're on a similar change at the moment with what's happening in the world at the moment. The you know plans will be changing, so uh good good to hear to for everybody that the opportunity the opportunity you're expecting isn't necessarily the one that's going to come along. Exactly, yeah. So, in terms of beef, where are we at? So they know that the mood music maybe in the markets and things is is mixed, I suppose, but where where are we at in terms of deadweight prices and your expectations for them?
SPEAKER_00Yeah, so yeah, we've we've I guess we're we're definitely heard a lot a lot of kind of uh bearish um talk and and signals at the moment. Um I think prices are fallen by um probably about 5%, or actually it'll be more after after yesterday's figure since the the start of the year, um, close to sort of 15% lower than last year when they were at just coming off their all-time high. Um, but then if you go back and give it that that kind of full historic context, still 20% above the five-year average, um, 25% higher than two years ago. So, yeah, if we'd been sat here in May 2024, um, when the price was, I think it was just under five pounds a kilo, um, and prices now um, I think our for L series were 616 or something last week, and heifers were 10p higher than that, um, yeah, you'd be you'd be probably really surprised that we're we're at this level. But obviously, after after last year and things have been coming down, um there's yeah, a lot of kind of negativity. Store prices obviously rebalanced as well, so um that that's kind of adding to that that that pressure, I guess. If you've paid um high prices for stores, then yeah, that that finished is going to be a bit of a squeeze at the moment.
SPEAKER_01Yeah. And I I suppose we're certainly feeling that supply and demand story in terms of stores as well, because they the as you hear at every store sale that the cattle aren't there, you know, the numbers are back, or there's certainly there's been a lot sold in this area, there's been a lot of trading done in the last as usual in the last two months, but you just wonder what's in the system to come forward later in the year. But equally, how much can that finisher absorb? You know, what the they've bought deer cattle, can they afford you know what does that store price do later on in the year? Obviously, that is very dependent on what the deadweight price does.
SPEAKER_00Yeah, yeah. So certainly over the last year we've we've seen that kind of that store price elevated relative to the finished price compared to kind of historic averages. Um so yeah, that's that's where we get that that squeeze from. Um interestingly, the carcass weights have been up, I think, by about three percent in the first quarter this year at Scottish Abattoir. So I guess in terms of that that price per head, that's maybe kind of offset some of that, some of that squeeze you get. But then you've got to factor in how much it's it's cost to add that add that extra weight.
SPEAKER_01And and do you think is it part of the reason that the price is coming back? You know, is it an is it the extra beef in the carcass is is bringing it back, or is there more to that story? What what's the what's driving the price down?
SPEAKER_00Yeah, that that I I imagine that that's contributed because you yeah, you'll if you've got heavier weights, then you don't need as many kind of heads to get that that same volume. And I have been sort of reflecting on it and wondering if it kind of is more of that kind of a volume mark at the moment rather than necessarily needing heads to get your your prime cuts because of the the way the the kind of consumer sensitivity to that that I guess 30% higher consumer price than than in than at the end of 2024. So I th I think that that's been contributing. I think, yeah, that we're probably still I I guess the market's still rebalancing to that that what happened last year, really. Um because even if we've got consumer spending has been rising at a r a strong rate, um 10%, whereas you've got wage growth at sort of 4% or something. So people are definitely spending money on beef. It's just the the way that price moved, it's it's hit the volume of of demand and yeah, competition from for cattle isn't as strong for that reason.
SPEAKER_01Yeah, yeah. And is there a conversation to be had in terms of supply? I mean, import-wise, there are stories of Australian product and South American product coming in. Is that do we know the scale of that, or do we know how is that a significant impact on what's happening, or is that just along the lines of what's been happening in the past?
SPEAKER_00Yeah, so that that that has that's been a kind of major, a major change. The the price inflation we saw last year, one of the responses to that was um a huge increase of imports from non-eU, which is mostly Australia, New Zealand, Brazil, and then Uruguay as well, to a lesser extent. But yes, those that that product it was sort of 5% of imports in 2023, and then hit 10% of imports in 2024, and then last sort of since middle of last year it's been above thirty or close to 30%. So that that's a huge change. I think it's been sort of five, six thousand tons of imports from those countries compared to a thousand or less before before that. So that that's been a major change. And it's it's kind of displaced Irish beef probably more than than um and than anything else. And it's like it's not really added that much to the overall volume of imports, but it's it's just changed that that composition. And a lot of that product is uh probably higher value cuts at really competitive prices, which is going into the food service sector. And if you you've you factor in that kind of squeeze on the on the hospitality trade from higher wage costs and uh higher labour costs, then yeah, there's probably been a bit of switching away from domestic product in in restaurants and um, I guess um other other types of hospitality trade, which will will probably be influencing that that overall overall prices in the supply chain.
SPEAKER_01Yeah, and that I mean that hospitality hospitality sector, you only have to go out for tea to realise the pressure that those that industry is under. Always, you know, always is under pressure, and it's it's a huge consumer of beef, and as you say, often a consumer of imported product based on massive pressure on price. And you you know we're we're all running businesses and it's a we can all point the finger at imports and things, but the these guys have to keep the lights on in the restaurants and hotels, it's it's a difficult one. What about in terms of so looking forward? And this is so obviously where we're at is is a there's so much to go at, it's not easy to do, but we could we can do it. But looking forward is obviously a crystal ball job, so we're we're having a bit of guesswork and estimation. But what's your gut feel with the future? Is there room for optimism in the sector, or do you think that reduction in price is going to continue for the foreseeable?
SPEAKER_00So if we sort of look at sort of general seasonal trends in the market, um supplies normally sort of tighten around Easter, and then there's a period of increase um through sort of May into June up to around Highland Show, and then things tighten up for the summer. So um yeah, this there probably is quite a lot of cattle around at the moment, which is probably also contributing to that um market situation um and reducing competition, but things should certainly tighten up from the supply side as we as we move towards the summer. So um there's potential that that could lead to some some rebalancing. Um and if look at the sort of retail demand, um, I guess the the that drift lower in farm gate prices probably does leave some sort of opportunity for a bit of more promotional activity and discount offers in the retailers, because that that's that's effectively come out of retail over the last year because of the way the the the price is has has changed. So yeah, hopefully that that can maybe stimulate a bit of bit of consumption through the summer. And maybe we'll get some good weather, because it's not it's not been a great uh great spring uh weather-wise so far. So hopefully, hopefully that kind of that can stimulate some some demand into those higher value cuts.
SPEAKER_01Yeah, good weather in a football world cup would just fit in just the job, I think it would be yeah, exactly.
SPEAKER_00That's that's what we need.
SPEAKER_01Um so yeah, and and I think it's it is reassuring to hear we're not you know, we're not on the brink of anything. We're not you know it's it we're probably adjusting to what normal is going to be, or where you know, uh we've had incredible prices. Uh but yeah, we're not, you know, I I I certainly I'm reassured from what you're saying that there's there's a lot of balls in the air. But I think is it fair to say globally we're still the supply supply of beef globally is short.
SPEAKER_00Yeah, yeah. So uh we've kind of had expansion of cattle supply in Australia and Brazil in recent years, which is um and just and then a but on the other hand, you've had America has been very, very, very short of beef. Um and I th I think there's an some expectation that Brazil and Australia are gonna move into that sort of downward downwards part of the cycle in the coming years. Um so yeah, I think forecasters are expecting a bit of a slight reduction in global beef production. And yeah, with I guess climate, you've got drought regularly hitting America. It's it's and I I it it sounds like they're not really gonna expand their production anytime soon. It's gonna be a slow rebuild. Um so yeah, I I there's there's not a lot of kind of optimism on the supply side out there. Europe, we're seeing a just a general drift lower in in production, um, both for beef and lamb. Um so yeah, things are fairly tight, and you've got that uh rising population at global level, which is supporting things uh from the demand side.
SPEAKER_01Yeah, and and certainly for me hearing that, all the indicators point towards this being a good place to produce beef. You know, we're we've obviously got a high cost structure, but we've got reliably mixed weather that can grow grass, and we're we're a pretty hospitable place to keep a cow, whereas there's there's plenty of bits of the world that are becoming really challenging to do that, and we don't have that rebuilding. Hopefully, we do have a rebuilding, we'll come on to that in a second, but we don't have that need for massive culling and rebuilding because of drought and and weather-related issues. So yeah, it's it's really interesting. What what I'm really pleased about is this so this podcast, uh Kirsten and I are lucky to host it, but this section is certainly a based on questions from the floor, questions from the listeners. So we've got a lot of good questions which I've been trying to kind of frame what we're talking about today. But one of the or one of the areas that there's quite a few questions on is about QMS's ambition to have two extra cows in each herd or to to grow the national beef herd. Um one, I suppose that if we're looking at abattoir waiting lists and you know, struggling to get cattle into the market uh at a glut time, why do we want to have more breeding cattle? Does that mean we've still got too many, or what do we need to do? And again, I suppose on that one, how how does the the principle of the two extra cows, how does that help me and my business?
SPEAKER_00Yeah, so it's that kind of like short-term, long-term thinking, isn't it? Um because I I guess effectively at the moment where the market is still reacting to effectively, I don't know, if you had 30% price inflation last year, that's sort of five, six years of normal price increases in one year, or in less than one year, it was something like eight months that that went through that retail level. So um that that's definitely hit hit that that sort of volume of consumption in the short term. But um as incomes tend to rise over time, uh, we'll we'll catch up and there'll be a kind of rebalancing. So yeah, the demand has been there. People have still been spending 10% more on beef than last year. So that that cash spending demand is is definitely there. So um, and in the long term, we've we've seen that that decline in the beef herd over the last decade, which is quite significant. Um average pace more than 1% a year. And in since 2022, it's been more like two to three percent declines each year, which has an impact on on supply in the long term and that kind of critical mass. Uh so that that's that's really where that it's it's that long-term call that to change change that that direction. That's that's what the campaign has been based around, and hopefully um supporting that kind of uh confidence as well from producers that in the in the long term the the demand is there and production is is has been tracking lower, which we'd like to like to reverse.
SPEAKER_01Yeah. Um one question I hear quite often is about the Scotch premium. So where obviously in the past, recent past, we've had a pretty significant Scotch Scotch premium over a product from England and elsewhere. Obviously, with very high prices that premium has been eroded. Do you think we'll see a return to a Scotch premium position, or are we at a point where we've you know, is the has the system changed to the point that we maybe won't see that back?
SPEAKER_00Yeah, that's that's a pretty difficult one to to make a call on. Yeah, um we we definitely have seen that that kind of price differential squeezed in recent years. It's it's even that the there used to be a pretty normal seasonal pattern where it would always be squeezed in the spring and then it would kind of rise to a a peak in the summer, but it's it's it's every year in the last sort of five years has been has been different. Some years that that gap has been bigger, some years lower. Obviously, at the moment it's there's there's been a much, much lower gap. So it definitely seems the the kind of market dynamics have have changed. Um and I imagine some of that supply is certainly um the the beef, the tugler herd in England um and Wales has is contracted at a faster faster rate than in than in Scotland. We've also seen changes in the abattoir, abattoir sector, um which which might have had some kind of influence there as. well on that that kind of competition between for for cattle. So yeah, it's yeah, hard I would say hard hard to tell. It's probably my position on that at the moment.
SPEAKER_01Yeah, and it's it's possibly not a a fair it is a proper crystal ball question. It's not a particularly fair question to ask, but it's one it certainly does come up a lot and I think it's one I think it's about understanding the wider position. You know, if if you've got a I mean in England if there's no there's no subsidy there's no direct support to suckler cows. So there's an awful lot of these cows have you know they're now in the cash flow they've now become cull cows in their way. So that the whole story has has changed and and I'm I'm pleased to see you know that the Scotch brand is still strong. It's just whether that premium story comes back. It'll be interesting to see I would certainly rather receive a high price than a premium. Yeah. That makes sense. So yeah on this so I suppose there's so much to go at and we've only got a very short period so if people want to get more information more analytics more take a deeper dive into prices and outlooks where do you have that available at QMS on website or where do we go to get that information?
SPEAKER_00Yeah so we we also have a monthly market report which is kind of rotating between species so it can um at that at that depth um if looking at sort of more longer trends we've got our our annual industry profile um and then each week we have our uh there's a markets dashboard in the QMS newsletter which really just yes dashboard it's just a a lot of different prices and and some charts to show you that that kind of what's been happening in the in the latest latest period and if you're I guess there's always opportunity to to get in touch if you're looking for something a bit more bespoke yeah I mean it's fascinating stuff and we could talk about it all day I'm sure shortly and or or or in the future we'll have you back on to discuss almost certainly a different scenario hopefully a positive one but who knows where it goes.
SPEAKER_01But Ian it's been really good to speak to you and we'll look forward to catching up with you in in the near future.
SPEAKER_00Yeah great great to great to yeah um have my first conversation with you on the podcast.
SPEAKER_02Excellent thanks Ian thanks for listening to this episode of the QMS podcast.
SPEAKER_01We hope you find the discussion informative and useful if you've got a question that you'd like us to ask in a future episode please send it to us by commenting on the social media channels or by using the anonymous submission link in the episode description.