Six months ago, the UK was approaching its second Brexit deadline of 2019, Prime Minister Boris Johnson had got his wish for a general election, and enjoying a Sunday roast with friends and family was pretty routine. It’s hard to believe we are currently several months into lockdown and reminiscing about the days of ‘normal life’.

Now, as we begin to try and understand what a new normal may look like, many industries will be adjusting to a new business landscape. For red meat producers, the pandemic adds to an already pivotal period of change for the sector, as a lacklustre livestock market adds further pressures to profitability and action is understandably demanded on the broader climate change issue. So what can producers expect from a Covid-19 recovery?

Expect market volatility

Since the outbreak of Covid-19 in the UK, prime livestock markets rose steadily as supermarkets covered expected increases in retail demand. But social distancing measures bought an abrupt shutdown in the variety of food services available and both prime beef and lamb markets fell back quickly as the supply chain came to grips with a potential glut of quality meat cuts normally responsible for a significant portion of total value.

Farming is regarded as an inherently volatile and risky business; markets, trade, weather and disease all pose a varying degree of risk. While not many could have predicted the scale of the current disruption, it’s important to recognise the regularity of market disruption and the need for business contingency plans to limit the impact when these times arise. 

Producers should be carefully considering marketing plans over the coming months as further Brexit deadlines approach and declining slaughter numbers risk supply backlogs. Contract market agreements, improving feed storage or reducing cost bases are all options to consider.

Expect a gradual resumption food service

The livestock market responses to the shift in demand highlight the relative importance of the food service sector. According to Kantar Worldpanel, every week the UK is in lockdown, 503 million meals that would normally have been eaten out are taking place at home. This absence of food service has major effects on the supply chain’s ability to extract the full value of a carcass and may keep downward pressure on prices until it returns.

A resumption from this sector will be watched with intent by many, but it is unlikely to look similar to that of pre-coronavirus for some time. Reduced discretionary spending power from consumers and concern of congregating in crowded places could prolong a return to full operation, as will any lasting social distancing measures that may translate to reduced seating capacities and lower staff numbers.

Business reopening will also depend on individual financial circumstances but it would be  reasonable to assume the benchmark of 503 million meals is some way off.

Expect sustainability issues to remain

We know that as populations continue to grow, our collective consumption will increase. But the issue of sustainable production will continue to see headlines until meaningful change is demonstrated.

Net zero legislation mandates the necessity to change and proposed new policy is likely to involve the entire supply chain to establish the most efficient solution. Producers should be comforted by this and be clear with consumers around where progress has been made.

Protecting the social licence to operate is imperative to a prosperous future for the sector, particularly as consumers increasingly consider social and environmental merits alongside monetary value.

Consumer trust is more important than ever and communicating the advantages of sustainable, ethical production that promotes an ethos of regeneration should remain high on the agenda for all producers.

The Covid-19 pandemic has reminded us of the unpredictability of disruptive forces. It has highlighted the need to plan and build flexibility in business plans to cope with widespread interruption and that adaptive businesses will succeed in the long run.

Whether any lasting change is instigated by the pandemic has many commentators split, but the sector is poised for change regardless, and as ever, expect farmers to take it in their stride.

Our recently published Red Meat Spotlight provides an overview of many issues facing the industry. It analyses current production and consumption trends, highlights the role supply chains can play in driving progressive change and puts in perspective many of the environmental concerns the industry needs to address to ensure a prosperous future.

Further information

Read more: Spotlight: Red Meat Outlook