Lamb Marketing: Market review of the organic red meat sector

Transcription

1 Welsh Organic Producers Conference 21st October 2010 Lamb keting: ket review of the organic red meat sector Bob Kennard Graig Producers

2 The European Organic ket Source: Organic Trade Board

3 Welsh Sheep Population Welsh Sheep & Lamb Population (Thousand head) Source: Defra

4 '000 head UK Sheep & Lamb Slaughterings Jan Feb ch April June July Aug Sept Oct Nov Dec Source: Defra

5 head UK Organic Lamb Production year cattle sheep Source: Defra Welsh Organic lamb numbers increased 47% between

6 UK Organic Sheep Production Production (2008) ORGANIC SHEEP In Conversion: 46,032 Fully Organic: 1,132,274 Total Organic: 1,178,306 TOTAL UK SHEEP 33,121,998 Organic as Proportion of total: 3.6% (since when numbers increased) Source: Defra organic statistics for 2008/Organic Beef and Sheep Development Group

7 Jan Feb Apr Jun Jul Aug Sep Oct Nov Dec Jan Feb Apr Jun Jul Aug Sept Oct Nov Dec Jan Feb Apr June July Aug Sept Organic Lamb Premiums 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% -5% Farm Gate & Supermarket Shelf Source: Graig Producers/Eblex/supermarket websites farm supermarket

8 Jan Jul Sep Nov Jan Jul Sep Nov Jan Jul Sep Nov Jan Jul Sep Nov Jan Jul Sep Nov Jan Jul Sep Nov Jan Jul Sep Nov Jan Jul Sep Nov Jan Jul Sep Nov Jan July Sept pence per kg deadweight Organic & Conventional Lamb Prices (Actual Values) Source: Graig Producers (Using Eblex conventional prices) Conventional Organic

9 GB retail lamb sales - volume Estimated volume sales in GB (moving annual total) up 9.5% 2008 down 4.4% 2009 down 7.8% Jan-03 Source: Eblex 20-Jul Feb Aug Feb Sep Oct Apr weeks ending 2010 YTD down 6.5% 04-Nov Nov Jun Dec Jul-10

10 Lamb ket Conclusions All lamb - Due to recession, lamb consumption shrinking in UK & Wales since 2008; Organic lamb - sales down more than conventional lamb. EU kets - German and other EU organic markets have not shown same downturn as UK

11 Welsh Red Meat ket Survey Surveyed (December 09/January 10): Smaller producer/processor/retailers - 32 Abattoirs - 8 Farmers markets 1 Association Method Telephoned, then sent questionnaire Response rate 75% Experience of sample Average years experience in sector - 12

12 The Bad News Survey Conclusions 1/3 rd of respondents had ceased trading over past 12 months. Most due to difficult trading conditions Some had stopped farming organically Others stopped direct marketing Only approx. 15 farmer/processor/retailers still operating in Wales 25% had evidence that bad organic publicity over last 12 months had reduced sales We will have to keep up the hard work and add much more value to make it all work. I don t see it becoming better.

13 The Good News Survey Conclusions Larger companies more optimistic good PR? Those left in business generally optimistic Turnover was higher in 2009, but not from organic sales. People still appreciate good food in the right locations.

14 Routes to market: Survey Conclusions Direct sales from farm Gate 28% Farmers markets 8% Box Schemes 8% Mail Order 20% Catering 16% Wholesale 20% Organic meat traded through Farmers markets particularly badly hit

15 Survey Conclusions Characteristics of Businesses Sourcing of animals 69% used home-sourced animals Throughputs Cattle: BEEF SALES (cattle head per annum) Lambs LAMB SALES (lamb head per annum) % % % <10 43% < % % <50 22% % < %

16 Survey Conclusions Outlook for 2010 Processing & keting An improvement on 2009 demand fall probably levelled out (a net 15% thought 2010 would be better than 2009); One major processor predicted no growth for two years. Farming Widespread concerns about financial viability Many would give up sheep if there was no Organic Maintenance Livestock prices have increased, but we cannot increase prices, so no margin, and sales have dropped. I will give up organic farming if premiums and grants disappear.

17 Survey Conclusions Major Constraints Production-based problems (6 comments): Supply & Quality difficulties Too much organic production Lack of slaughtering facilities keting problems (5 comments): Drop in demand Greater competition Lack of outlets Management (5 comments): Lack of margin/high costs Lack of time to market properly Customers Customers lack of knowledge of organic systems and benefits

18 Survey Conclusions Major Threats (85% thought there were threats) Organic ket (7 comments) Declining interest in organic Too many newcomers into weak sector Increased costs and inability to raise prices Lack of organic purity due to large-scale company involvement External Economic factors (2 comments) It s the economy, stupid! Supermarkets too powerful Supply issues (1 comment) Lack of quality mutton animals

19 Survey Conclusions Effect of Bad Publicity about organic food 25% of respondents said stories such as FSA report had negative impact on sales. Some comments that smaller, direct-sale sellers not affected due to personal relationship with customers Some concern that light green alternatives becoming more acceptable than organic. (the publicity) has probably affected casual sales. Our regular customers and the word of mouth custom they bring, have remained the same. Popular opinion is favouring welfare friendly Freedom Food as opposed to Organic.

20 Survey Conclusions What Can BOBL Do for You? An Organic Roadshow could travel to Farmers markets around Wales and offer a genuine debate about organic food. Use public procurement to increase organic food consumption. Combine tourism with organic food two respondents said their B&Bs were doing better than organic meat sales. Educate the next generation about organic production. Advertise good organic farms and encourage farm walks. Stress the climate change benefits of organic food. Tourism promotion - run courses for organic accommodation suppliers to educate the public when they stay at B&Bs.

21 Survey Conclusions Overwhelming frustration that the organic message was being misheard, misunderstood or rejected by consumers. Widespread view that BOBL could help sector by: promotion of a positive organic message. explanation and education about organics Perceptions that Organic is more expensive than it actually is makes local sales really tough and organic is now less persuasive than the local message, which means that sales to more distance buyers have fallen off.

22 Be bold about the fact that organic tastes good, does you good and is good for the environment too. Speak up and tell the story!