Horse Meat Find Seen Boosting British Cattle Prices

The discovery of horse meat in processed beef products in Europe is poised to boost record prices for British cattle, as shoppers pay closer attention to labels and buy more expensive products, independently audited to prove their origin.

There’s no evidence yet that U.K. consumer demand for beef slowed after reports by some supermarkets that horse meat was found in ready meals meant to contain beef, said Nick Allen, the executive director of the Agriculture & Horticulture Development Board’s beef and lamb unit, EBLEX. Instead of switching to other cuts like pork or chicken, customers will probably spend more money for higher quality beef at meat counters or shop at independent butcher shops, he said.

Consumers may buy more products with single country-of-origin labels or tags showing meat has been inspected by third parties to guarantee quality, Allen said in a telephone interview yesterday from Kenilworth, England. Demand may increase for products labeled under the Red Tractor Assurance program, which certifies meat is produced in the U.K. and guarantees animal welfare and environmental standards, he said.

“This may increase demand for U.K. meat and may have upward pressure on prices,” Allen said. “At the moment, on the cheaper end of the supply chain, processors sometimes buy meat from four, five, six different countries and stick it together. Consumers in this country now are going to say ‘no’ to that. They’ll want to hear where it’s coming from, and they won’t want to hear it’s a blend of different countries.”

Cattle Herd

British spot-market steer prices rose to a record 3.865 pounds a kilogram ($2.75 a pound) in the week ended Jan. 5, up 8.8 percent from a year earlier, according to EBLEX. The U.K. cattle herd last year was about 9.9 million head, the smallest since at least 1974, according to Eurostat, the European Union’s statistics office. The U.K. is the EU’s fourth-largest beef producer, after France, Germany and Italy, according to Eurostat.

Cattle futures on the Chicago Board of Trade, the global benchmark, rallied to a record $1.35175 a pound on Jan. 11. Prices fell 1.6 percent last week. In the U.S., the world’s biggest beef producer, the cattle herd in January shrank to the smallest in 61 years as feed costs climbed amid record corn prices and drought that scorched pastures.

The U.K. Food Standards Agency on Feb. 8 said it was giving food makers a week to test all their beef products, after a range of lasagnas produced by Findus Group Ltd. was found to contain more than 60 percent horse meat. Supermarkets including Tesco Plc, Wal-Mart Stores Inc.’s Asda and Aldi have removed some ranges of frozen beef burgers from their shelves in the past month as concern has escalated over tainted meat.

Food Chain

The prepared meals sold by Findus were manufactured at a Luxembourg factory owned by French company Comigel, France’s consumer and anti-fraud office DGCCRF said Feb. 9. Comigel’s supplier was Spanghero SAS. It bought the frozen meat from a Cypriot trader that sub-contracted a Dutch trader who sourced the meat from a slaughterhouse and a meat packer in Romania, according to the DGCCRF. Romania’s Agriculture Minister Daniel Constantin said there’s no indication that the meat mislabeling was done in Romania.

“The contamination took place post farm gate, which farmers have no control over,” Peter Kendall, U.K. National Farmers Union president, said in a statement yesterday. “Our members are rightly angry and concerned with the recent developments relating to contaminated processed meat products.”

British retail prices for sirloin steak climbed to 20.71 pounds a kilogram as of Feb. 2, the highest on records since January 2004, according to EBLEX data. The price of standard minced beef was 4.77 pounds a kilogram, also the highest on record and 11 percent higher than at the same time last year.

“The reason processors are blending meat is to keep it cheap,” Allen said. “If they separate it by individual country of origin with labels, there’s a cost that comes with that. That cost will have to be taken up by the processor or paid for by the consumer.”

(France corrects name of supplier in eighth paragraph of story published Feb. 12.)
Before it's here, it's on the Bloomberg Terminal.