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Why the UK's meat supply chain is in crisis

By Rick Pendrous , 04-Dec-2012

The news last month that Vion is to sell its UK food businesses, covering 38 sites and employing 13,000 people is a sure sign that the UK's meat supply chain is in crisis.

Vion was once held up as an exemplar for how a meat business should operate: from farm through abattoir to manufacture a vertically integrated business in control of all its supply chain costs.

Today that argument appears to be in tatters, although several City analysts have suggested that it was Vion's purchase of the troubled Grampian Foods Group in 2008 that sowed the seeds of its problems.

Dr Clive Black, head of research at City analyst Shore Capital, has also criticised Morrisons' vertically integrated structure since, he argued, it removed competition along the supply chain, which helps to drive out costs. Black's position would appear to be at odds with that held by European Food and Farming Partnership's Siôn Roberts, who urges closer collaboration along the supply chain.

The UK is a small nation with high production costs. Lower cost producers from Brazil to Thailand have the advantage of lower feed and labour costs. Even the Netherlands and Germany have greater economies of scale. And the UK's pig producers have long argued that our higher welfare standards have put us at a cost disadvantage with the rest of the EU.

It is often said that British consumers want to support UK producers. But, when food prices are rising faster than their incomes, they are surely less likely to want to pay more for local provenance.

So, it's probably time to ask whether the meat sector has a future in the UK. And perhaps also to reopen the debate about sustainable intensification.

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