Ex-farm prices for Scottish prime cattle have climbed to become the highest in Europe, piling the pressure on meat processors.
They have over the last year endured a 15% increase in buying prices, swamping any rise they have been able to secure on wholesale beef prices.
Quality Meat Scotland head of economic services Stuart Ashworth said the average £4.14 a kg deadweight rate recorded last week for Scottish R3 prime steers compared to a GB price at £3.93, £3.65 for young bulls in Greece, £3.45 for steers in France and Irish cattle at £3.30.
Rates in the US are £2.85 a kg, while in Brazil they are struggling to receive £2.
Mr Ashworth said the UK prices explained why beef exports have recorded a 9% decline so far this year. UK beef production continues to be hit by falling cattle numbers, with a drop of 4% in 2013. Imports are similarly down by 2% in response to UK retailers committing to only using British and Irish beef in their stores and beef-based ready meals in the aftermath of the horsemeat scandal.
“The indication from trade statistics is that the quantity of beef on the UK market has fallen by 3%. The tighter supply has contributed to some increase in retail price with the latest price information from the Office of National Statistics showing retail beef prices are 7% higher than 12 months ago.”
Mr Ashworth said the lower production was further aggravating the problems faced by processors as their operating costs were having to be carried on a much reduced quantity of meat. The situation contrasts with that in France, where beef production is down 4-5%. Retail prices there are up 3.5%, while ex-farm rates have shown just a 1.4% rise.