Traditionally meat farming has been viewed as one of the more lucrative forms of farming in the western world. However, in recent times, there are a number of things that have been threatening its profitability, and also threatening food supplies. In most of the EU and especially the UK, farmers are having a hard time selling their produce at a competitive rate to the retailers, and therefore to make a reasonable profit. The main reason for this is the behaviour of the supermarkets, which are viewed in many quarters as colluding to minimise the effects of any negotiations from the farmers. The fact that the supermarkets are the major buyers of meat puts the farmers in a very difficult position, since it means that most of them would need to abide by the regulations that are set up by the supermarkets.
How The Market Should Work
The goal of a meat economy is to make sure that supply and demand determine the cost of a particular set of goods or services. Having the supermarkets dictate how much they are going to buy the meat at is a way of destabilizing the system. This is usually considered to be an unfair practice in most markets, especially if all the supermarkets agree to buy the goods at a particular price. This then means that the farmers would not be in a position to sell what they have to other markets.
The problem is compounded by the fact that since August, the government of Russia has banned the importation of some agricultural produce from the EU. This further reduces the markets to which the farmers can sell their goods.
The Proposal By The EU Commissioner
Fortunately, there is some light at the end of the tunnel for those involved in the meat industry. The agriculture commissioner in the EU, Phil Hogan, has recognised that there is a problem in as far as pricing of meat products is concerned, and has committed to making sure that this is sorted out as soon as possible. Some of the measures that might be put in place include putting in place more stringent laws to prevent unfair practices by the supermarkets. In addition to that, he has also committed to providing funds to absorb some of the goods that might be lost on account of Russia not importing any more meat products into its market.
Meat farmers in the country are an extremely tough negotiating situation when it comes to dealing with the supermarkets, it’s good news that this is recognised by the EU. Time will tell if the measures actually have any effect and will actually work.