Beef traded off as household budget strain sets in

Market analysts say the tight cattle supply situation will continue to be the dominant factor influencing the price of retail beef in Australian supermarkets and butcher shops, for the rest of this year at least.

It may be there has just been the first easing in retail beef prices in four years on the back of increased volumes being offered locally but prices are still at historic highs.

The domestic market is also experiencing it’s own pressures.

Supermarket bosses and food relief agencies this week spoke up about rocketing electricity bills, and record slow wages growth, forcing average families to trade off fresh meat and produce.

Rabobank senior analyst animal proteins Angus Gidley-Baird said while it was certainly the case that meat would be sent to whatever market was paying the most, there was simply not the volume of product available to put any significant downward pressure on domestic retail prices.

“We are still trying to rebuild and recover volumes and so remain in that limited supply phase,” he said.

“And while there are some big challenges happening in the export business, we’ve not suddenly been confronted by a big slowdown globally with large volumes having to be redirected.

“There is still very strong demand from Japan, Korea, China and even the US.”

Beef wholesalers and retailers say the current dynamics at play are creating trends that may have longer term implications, both good and bad.

Big fresh meat supplier to the food and beverage industry throughout Queensland, Brisbane-based Diamond Cut reports beef quality is very good at the moment but the low supply situation that has existed all year has not shifted much in the past month.

Sales manager Barney Martin said chefs were finding it very difficult to write beef into menus when supply could not be guaranteed.

“In a lot of cases, they have stopped branding beef on menus, and are foregoing premiums,” he said.

“There could be fallout for beef. People are more food savvy these days, they want to know where their food is coming from.

“Chefs know people want branding.”

Mr Martin believes as soon as supply picks up again, chefs will return to branding but whether consumers have switched to other proteins in that time remains to be seen.

On the other hand, beef’s advantage in terms of consistency was coming into effect under current market conditions, Mr Martin said.

“It’s always about price but consistency of product is a big thing. Our customers will spend an extra 20 cents a kilogram if they can get consistency - because that is another thing consumers are demanding,” he said.

Independent butchers also appear to be cashing in on continuing growth in demand for grass fed meat.

Paul Taylor, Gold Coast Fresh Meat Centre, says his business takes pride in offering high quality, grass fed meat that is both flavoursome and nutritious without breaking the budget.

“Shoppers are super savvy today and although price is a huge driving force behind a purchase, they are more health-conscious, quality and service driven,” he said.

“By selling grass fed produce here - and at a good price, due to its high demand - we can stay ahead of the supermarket big guns.”

Australia’s largest hunger relief organisation Foodbank says there is unprecedented demand for meals with households now choosing between heating and eating.

The Australian Council of Social Service has also released a report verifying energy stress has severely impacted households, particularly where incomes are lower.

This follows comments from the head of the Coles supermarket chain, John Durkan, on big changes in consumer patterns as a result of household budget strain, with some forced to make unhealthy food choices.