3.1. Organic beef
The volume of UK beef marketed as organic continues to grow and overall sales of organic beef increased by 23.3% in the year to April 2004. However, import levels increased to 63% 1 over the same period. In terms of supply and demand these levels of imports are unnecessary, as UK production would be able to cater for a much higher percentage of the market share. However, issues within the supply network result in an amount of organic beef being sold as non organic 14.
The Organic Market Link Project (2004) 19 found that between July 2003 and June 2004, 3,717 organic cattle were slaughtered in Scotland and it was predicted that 5,751 would be slaughtered between July 2004 and June 2005, more than a quarter of all organic beef cattle finished in the UK (19,284 1).
Figure 3.2 illustrates the predicted finished cattle production levels (July 2004 - June 2005) 19 demonstrating that throughout the year supply remains fairly constant, avoiding seasonal shortages or gluts. However, it is uncertain how this transpires into numbers of slaughtered organic cattle as only those that are needed to meet demand will be slaughtered. Consequently, many will be left on farm as seen throughout the UK in 2005.
Figure 3.2. Finished organic beef produced in Scotland
Source: SAC, OML survey, 2005 19
3.1.1. Survey results - Volumes and market outlets
From the survey information gathered last year by the OML project and this year by the project team, it is possible to gain a valuable insight into the value and market penetration of organic cattle in Scotland.
The survey conducted for the purposes of this project elicited responses from 60 producers who rear store cattle and 75 producers involved in finishing beef. For the year July 2004 to June 2005, they account for a total of 2,517 stores and 2,792 finished cattle, 49% of the predicted number of finished cattle. The survey results are therefore assumed to be representative of the entire population.
3.1.2. Direct to processor
The survey shows that 80% of the finished cattle were sold direct to a processor for slaughter, butchery and sale. Just over 48% were sold to abattoirs in England, 15% to Scottish abattoirs, with the remaining 17% being sold through outlets with an unknown location, for example via non organic auction market (table 3.1).
Table 3.1. Outlet volume by location, 2004 -2005
Outlet location | Percentage share of Scottish organic beef |
|---|
Abattoirs - England | 48% |
|---|
Abattoirs - Scotland | 15% |
|---|
Abattoirs - Unknown | 17% |
|---|
Scotland - direct | 15% |
|---|
Scotland - independent retailers | 5% |
|---|
Despite the fact that 48% of Scotland's organic beef is sold to processors in England for slaughter a proportion of this meat may be returned to Scotland for further processing. For example, more than 11% of Scotland's organic beef is sold to Dawn Meats, who use slaughter facilities in England and a cutting plant in Ayrshire for some of the organic carcass for retail.
Scottish processors sold around 80% of their organic beef to supermarkets. A significant proportion of beef processed is also sent back to producers for sale (15%). The rest of the organic beef handled by processors in Scotland was sold to independent retailers. Producers received a range of prices for their beef of between £2.00 and £2.70 per kilo (dead weight) when selling to processors.
3.1.3. Direct to consumer
Whilst processors buy the vast majority of finished organic beef before it goes on for further processing or retail, there are a number of producers engaged in direct sales. For example, direct and local sales (farmers markets, farm shops, box schemes) accounted for 12% and mail order 3%, of all Scottish finished cattle. Sales to independent retailers account for the remaining organic beef - approximately 5% of the organic beef processed in Scotland.
3.1.4. Value at farm gate
In the year to July 2005 the farm gate value for organic cattle in Scotland was an estimated £4 million. Not all of the finished organic cattle will have been sold as organic. The majority of Scottish organic cattle produced are sold to processors that in turn supply the multiple retailers. However, the number of producers are selling meat either direct to customers through mail order, box schemes and farmers markets, or to independent retailers is increasing. The survey found that over 300 cattle were marketed through alternative (non-multiple retailers) routes which could equate to as many as 600 being sold this way during 2004/05.
3.1.5. Penetration
Supplies from Scottish producers equate to more than a quarter of the UK's organic beef production or approximately 9% of the organic beef consumed in the UK. According to TNS research carried out on behalf of the research team (see section 4) Scottish consumers represent only 5.4% of the UK's retail value of organic food and therefore Scotland's organic beef sector has the potential to meet domestic consumer demand, thus achieving 100% market penetration.
However, the results of the survey suggest that not all of the organic beef produced in Scotland is processed or sold in Scotland. The survey suggests that 35% of the organic beef produced in Scotland remains in Scotland for sale (processed within Scotland 15%, direct sales 15% and sales through independent retailers 5%) equating to 2,012 carcasses or 71% of the organic beef consumed in Scotland (see appendix I). Therefore market penetration currently stands at approximately 71%.
3.1.6. Summary:
- In the year to July 2005 an estimated 5, 750 organic cattle were produced in Scotland, worth an estimated £4 million at farm gate;
- During 2004, 37% of organic beef sold by UK retailers was produced in the UK;
- The market penetration level of Scottish organic beef is currently an estimated 71%;
- Approximately 20% of Scottish organic beef is sold through direct or independent channels with the remainder being sold through the multiple retailers but not necessarily as Scottish.