Ráðunautafundur - 15.02.2002, Síða 177

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This suggests that there will be increasing recognition of how agriculture within the rural environment
means more to society than just food and fibre.
EU Enlargement
It is widely accepted that the European Union will expand in the short term, despite fears in some
member states. This will increase the pressure on EU fmances which influenced the recent Agenda
2000 reforms and will be relevant when considering further reforms. The CAP needs to be in a state
that makes it financially viable when new countries join; at the same time it has to allow for the
impact of the extra competition on food markets (and on the agriculture of existing member states),
when the output ffom the new member states is allowed ffee move meat on EU markets.
Increased Competition - More Opportunities
The inevitable impact of these global movements will be to increase long term competition to British
producers ffom countries that have a lower cost base. On the non subsidised intemational meat
markets, beef and sheepmeat ffom the ‘extensive’ range and feedlot producers e.g. Australia and New
Zealand have long been purchased at between a third or half the price of meat in the EU. Within the
intensive livestock sectors new competitors ffom the Far East e.g. Thai chicken, America’s e.g.
pigmeat in the USA and Brazil are significant threats. This indicates that protection for UK farms
ffom such competition could only come ffom ‘environmental payments’ to replace the direct
production subsidies.
The other dimension of globalisation is the greater access to an expanding market. With world
population continuing to expand and (hopefully) as the economies of the developing countries and
their diets improve, the world demand for meat will increase (MLC, 2000)! In general British
producers will always fínd it difficult to compete directly on the commodity markets, but through
adopting a strategy of ‘product differentiation’ the industry can compete, particularly on the home and
the specialist export market (e.g. branded Welsh lamb). At the same time the meat trade is
increasingly a ‘cuts’ market and as such even on the commodity level, the surplus in some ‘cuts’ can
be traded profitably
4. Developments in the UK Supply Chain - the Retail, Abattoir and Auction sectors
A Concentrating ‘Mainstream’ Retail Sector
Consolidation in the UK grocery retail market has been occurring over several decades following the
social changes influencing consumers. Small independent and specialist shops, such as butchers,
gradually lost market share to the multiple supermarkets throughout the 1960’s, 70’s and 80’s, but it
was only since the rapid development of out of town superstores in the late 1980’s and 1990’s that this
gradual movement became a ‘tectonic’ shift:-
• Householders now purchase 75 per cent of their meat and poultry through multiple
supermarkets compared with 47 per cent 10 years ago.
• Butchers now have a 12.5 per cent share - 10 years ago it was 30 per cent.
The five largest supermarkets (Tesco, Sainsbury, Asda, Safeway and Somerfield) account for over 60
per cent of red meat purchases in volume terms.
The gains in market share by these retailers will slow but, even so, the multiple retailers will continue
to dominate the meat market. With the need to increase market share in multiple retailers minds, the
needs of customers remain uppermost in determining the requirements of the supermarkets:-
• traceability of the product
• welfare/ environmental issues
• price/value for money
Consideration of all these issues is passed down the chain to the processors/abattoirs and ultimately
the farmer. This increasing change in the retail supply chain, with the dominance of the large
supermarkets, has been driving their ‘just in time’ supply needs, supply scheduling through electronic
data interchange (EDI) networks and production to HACCP standards. Such issues are also likely to
become increasingly important and it will become more and more essential that farmers are able to
meet the needs of the large multiples with the volume of product required.