Ráðunautafundur - 15.02.2002, Side 179

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Increasing concentration means that the largest abattoirs will increasingly focus on supplying product
to the major multiple retailers and food service suppliers, thus emphasising the impact that a relatively
small number of players can have on the overall meat market.
For the medium and small plants in order to survive, some form of competitive advantage needs to be
identified. Adoption of quality assurance schemes is also crucial and the movement down this route
along with viable product differentiation schemes is being encouraged.
The survival of abattoirs in remote areas, is seen by some as crucial if the cost, logistical and possibly
welfare difficulties, associated with moving livestock long distances to slaughter are to be avoided.
Some local, small and medium sized enterprises in the abattoir/processing sectors are already looking
at working more closely with farmers to offer more differentiated/regionally branded meats and meat
products.
Further rationalisation in the abattoir sector, however, looks inevitable. Many large-scale abattoir
companies, provided they are locked into supplying the major multiples, are looking to expand their
secondary processing facilities enabling retail packing and the production of value added products to
be further developed. For many of them the export market is crucial to their long-term prosperity.
The smallest ‘low throughput’ abattoirs perhaps supplying local or nic’ne markets will continue to
face high costs but much will depend on their success at exploiting local opportunities. Despite recent
moves by Govemment to reduce financial burden on small plants. It is inevitable that the weakest will
not survive.
Perhaps the biggest difficulties are however, faced by the ‘full throughput’ independent single plant
companies, that have only basic cutting facilities and whose sales portfolio does not include a large
retailer or food service supplier. They serve a traditional market (small retail butchers, small
wholesale/processors) that is in decline and a potential market that is demanding more ‘value added’
meat than they have traditionally supplied. A number of these plants may be bought out by the larger
companies as they seek to ensure nation-wide coverage. However, if they are to survive alone,
investment will be required to enable the development of at least ‘second stage primary processing’
facilities (cutting, boning, mincing and dicing facilities) and possibly some ‘secondary processing’
activity, such as retail packing and the production of some other value added products.
The Auction Market Sector
The auction sector plays a vital role in the British sheep sector handling 52% of the slaughter stock,
and the majority of breeding and store stock. It faces a number of pressures affecting the viability of
marts :
• increasing operating costs (particularly from higher environmental charges i.e. cleaning and
water treatment)
• falling livestock numbers
• competition from deadweight sales (both ‘direct’ to abattoir and through co-operative
procurement groups)
• location
The number of livestock auction markets in England and Wales has fallen from 259 in 1990 to
approximately 180 at the current time. All have been closed for a full 12 months since the beginning
of the FMD crisis. In the meantime substantial sums have been foregone through lost commissions,
and they are now struggling to generate other sources of income. Some have used the market site to
operate disinfection facilities, some have organised deadweight sales for customers or remote sales.
In May 2001, a number became operational as collection centres to assemble smaller groups of stock
for transport to abattoirs. The sector is not expected to re-open until mid-February 2002.
Most markets have also seen a decline in the number of buyers that bid for finished animals each
week; this has occurred as a result of the closure of many of the smaller butchers and the small and
medium abattoirs that purchased stock from them.
In the future auction markets may remain important for store stock sales, but as a result of the
problems caused by FMD, the anticipated changes in regulations that will follow it. Many will be
looking to re-engineer their businesses, rationalise and/or create joint ventures.