By Ludo Sappa-Cohen
Best for Britain's Head of Press
You can’t kill half a cow. You can’t slaughter part of a pig. You can’t despatch just the choice cuts of a chicken.
And, in the world of livestock farming, that presents a huge challenge, because some parts of animals are worth far more than other parts.
That has become a particular issue since Covid-19 cast its shadow over our dining habits but it is also something with huge implications for future trade, as Britain tries to steady itself in the wake of our European divorce.
It serves as a useful example of why landing a trade deal is not the end of a process, merely one step in a complex series of processes, albeit an extremely important step.
And it’s a timely reminder of the inter-connectedness of trade. Without efficient international trade, for example, Britain would quite possibly run out of bacon and gammon, as we worked out what to do with all the pork bellies – more on that later.
First, a brief look at the problems caused by Covid.
A bit about bites
Recently, journalist James Ball of The New European and The Bureau highlighted the lockdown problems being caused to farmers by dint of the fact that you can’t kill half a cow.
With restaurants shuttered and domestic freezers more likely to contain mince than sirloin, our consumption of steaks dropped markedly.
For farmers, this presented a double dose of bad news.
Firstly, incomes took a hit, because those rib-eyes and filets effectively subsidise the cheap stuff that ends up as mince, sausage and suchlike.
It is estimated that, in April-June, 2.5billion ‘eating out occasions’ simply didn’t happen, and a lot of them would have involved steak – 20 per cent of the UK beef market goes to the restaurant sector, most of it steak.
We’ve all been eating in and, as anyone who tried to buy the ingredients for a Bolognese as lockdown kicked in will tell you, demand for mince (and pasta) wasn’t exactly dulled, and some supermarkets looked to Poland to maintain supplies.
But, behind the scenes, another problem was building: what to do with all the more expensive cuts of beef now that demand for them had collapsed.
Initially, sticking them in storage was a short-term fix, even if that cost money. But cold storage space is not unlimited and so other solutions were needed.
Price promotions offered only limited respite, firstly because they couldn’t make up for the fact that restaurants were closed and, secondly, because producers are nervous about getting consumers in the habit of expecting dirt-cheap steaks.
When some parts of your animal outsell other parts, you have a problem, and it’s a problem with a real Death Metal name: carcass imbalance.
I’m sorry. Was that carcass imbalance?
Yes and it’s not something that’s unique to the time of Covid.
Let’s turn our attention to pigs, a particularly good example of how carcass imbalance messes with markets.
Britain has upped its pig production over the last decade by almost a quarter and Brits now consume about 6 per cent more pig products.
However, British pork still makes up only about 40 per cent of the domestic market – much of the extra we have been producing is exported. But why, when domestic demand is there to be satisfied?
We’re back to carcass imbalance.
You see, the British market wants lots of loin and leg, far more than British farms produce.
Back bacon, chops, joints … all come from the loin, so we have to import heavily. It’s a similar story with legs, from which we get gammon and ham.
Other cuts, such as belly and shoulder meat (hello sausages), are far less popular, while the tête, tail and trotters get no love whatsoever.
Here are some very rough figures from five years ago, when around 11million pigs were slaughtered in the UK. For a perfectly balanced, self-sufficient market, you would therefore want demand for each of the various cuts to be equivalent to 11million pigs.
In fact, demand for loin was closer to 23million pigs, and for legs the figure was 19million.
But the domestic market for shoulder was only 7million pigs, and for belly a mere 5million. And nobody, apart from a smattering of nose-to-tail restaurants and non-foodies, was really interested in the other bits.
British farmers could not, realistically, provide 23million pigs’-worth of loins without also finding a market for 4million pigs’-worth of legs, 16million of shoulder and 18million of belly.
Other countries, of course, have their own carcass imbalance, and farmers facing their own numerical challenge.
It’s a similar story with poultry: we want breast, but that leaves a lot of legs, wings and other bits to shift as well. And if you can’t find a market for the unwanted stuff, the good bits are going to become both more expensive and more scarce.
The impact of EU and US trade talks
As tricky as this breeding balancing act sounds, it is, of course, a gross over-simplification of the challenges faced by farmers and those who represent their interests.
When it comes to trading internationally, countless other factors come into play when doing the maths.
Are there tariffs or other taxes to be considered? What animal welfare standards must be adhered to? What substances are permitted to be injected into the animals? How likely are the rules to change? What deals are traders in other countries offering?
And so on, and so forth.
This is why trade deals are big deals. It’s not just that they can open up foreign markets and our own market.
It’s that they can bring a little certainty into a very uncertain trading environment.
If, come January 1st, Britain’s EU divorce ends without a deal with the EU, for example, or with a very weak deal, the economics of livestock farming could be upended, literally overnight.
Conversely, if the Government manages to agree a deal-to-end-all-deals, with huge new European opportunities for hard-pressed farmers, it’s going to take time to adapt.
Farmers will have to plant new pigs and cow-trees, and wait patiently for them to bear oinks and moo-fruit.
In the meantime, they could find themselves in the middle of an awkward set of negotiations with the US over chlorinated chicken and Chinese telecoms giants. Or with Australians over what hormones and mutilation are acceptable in livestock.
A trade deal isn’t over when the documents are signed; that’s merely the end of the beginning, when both sides can start planning, then implementing and, finally, selling according to the new rules.
This week, the National Farmers’ Union welcomed Government proposals to set up a Trade and Agriculture Commission to ‘protect British farmers’ interests’ and make (non-binding) recommendations to Parliament.
Any progress in this sector is to be welcomed. Half a loaf, as they say, is better than no loaf at all.
Whether that applies also to cows remains to be seen.
By Ludo Sappa-Cohen
Best for Britain's Head of Press
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