Although Canfax provides producers with cattle prices, there is little information on what packers are paying for beef or lamb
Trust is the number one issue for livestock producers globally when it comes to price transparency, according to a recent survey.
Cattle and beef price transparency and fair prices are subjects that generate a lot of anger yet there are no obvious ways to obtain that transparency, said agriculture economist Peter Weeks during the Agri Benchmark Global Forum in Saskatoon June 23.
The survey targeted beef experts across the Agri Benchmark network, whose 30 plus member countries included all major producers and around 90 percent of world beef production.
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One of the main questions was whether cattle producers think they receive a fair price from packers.
“What we found is that there is concern across almost all countries that producers do not always receive a fair price for their cattle from processor-packers,” said the Australian global meat and livestock market analyst.
“If you do not know what other cattle are selling for and what the beef is selling for, how do you know you are getting a fair price?”
Producers in the United States and Sweden showed least concern, while Australia, the United Kingdom and Peru had the most supply chain distrust.
Canada was in the middle of the pack alongside France and Indonesia.
“I was surprised to see the level of concern in Canada, given the excellent Canfax cattle price reporting and market intelligence service and the use of the CME futures market, and I note that the Canadian Cattlemen’s Association appointed a price discovery taskforce in 2014,” he said.
“You might know what the cattle are selling for through Canfax, but you don’t really know what’s happening on the meat side, the beef side or sheep meat side further down the chain. That tends to cause producers all around the world to be a little bit distrustful of their buyers.”
Canada also placed in the middle with some concern about supply chain market transparency.
Producers in the U.S., Peru and Spain had the least concern while Australia, South Africa and Ireland had the most distrust.
“There is moderate concern in Canada, despite the provision of some wholesale prices, a cut-out value and some retail prices,” said Weeks.
He credits price reporting in the U.S. for greatly improving the trust within the industry.
“Where there are active derivative markets (futures), there tends to be less concern about transparency and fairness. Outside of the U.S. and Brazil, few countries have this. If the U.S. experience is a guide, mandatory cattle and beef price reporting can overcome price transparency and fairness issues,” he said.
“It doesn’t mean that they don’t get periods because of supply where they’re not getting the full benefit of the prices that might be seen. That does happen, but I think what they are now convinced of is that there is not collusion within the processing sector that is causing them harm.”
Weeks credits consumers for helping drive transparency and ultimately promoting supply chain trust, as well as co-operation and alternative marketing arrangements.
“Increasingly, consumers are quite sophisticated and varied, and it’s harder and harder to fully meet their needs in terms of safety, product integrity, hormone and growth, organics and all the nuances that consumers are now coming up with,” he said.
“The cuts that they now want and the way they want it cooked is getting a little more sophisticated. The only way to fully meet the consumer requirements in an optimal way is to have almost a fully integrated chain.”
Weeks said relationships that provide feedback need to be built up and down and along the supply chain.
He said feedback will break down from the grading system to the producer if full information is not provided with comprehensive details.
More feedback equals better quality, which equals a satisfied consumer and happier producer.
He said Australia currently has an extreme case where there’s a weak supply chain relationship with minimal feedback of carcass traits and grading back to the producer.
“What we found in Australia is that there is far more variation within farms and within breed than there is between breeds and between farms,” he said.
“They don’t actually know on their own farm which animals are performing for the consumer and which ones aren’t.
“In general, without that carcass feedback getting back to the producers in detail against price, you just don’t know… which bull is siring the best animals for not just weight gain but carcass traits.
“I can’t talk for Canada, but that’s where a lot of progress around the world needs to be made.”
