Price wars risk destroying Horsegate legacy

The results from European Commission tests for horse meat in processed food products suggest lessons have been learned. This is a food scare that will now slip quietly off the radar.

With beef prices on the floor across Europe, however, farmers now look back to the months after the horse meat scandal as a time when it finally looked as though better days had arrived. Unlike BSE and other food scares, farmers were not in the firing line, but instead were well placed to gain from a new enthusiasm for more local sourcing, shorter supply chains and a greater focus on the provenance of food on supermarket shelves.

Just after the horse meat crisis the figure for positives from tests was 4.6%, with the biggest number of contaminated products found in France. In the latest tests there were just 16 positives from well over 2,000 samples – a detection rate well below 1%. The highest number of positives, four each, were in Romania and Hungary – not surprising perhaps, given that those countries regularly use horse meat. There were three in Portugal, and one each in a number of EU Member States. The figures for both the UK and Ireland were zero, confirming that processors and retailers have learned lessons from last year.

The early summer of 2013 was a great time for meat producers, and not only those producing beef. The horse meat crisis pulled up all prices. With their reputations at rock bottom, supermarkets promised customers shorter supply chains, and a number began selling only British meat, be that beef, lamb poultry or pork. Prices moved up for farmers – not into the stratosphere of a sellers’ market, but to levels that made the industry more sustainable. It became fashionable to sell home-produced food, and consumer confidence was rebuilt. The retailers had to pay these higher prices without increasing prices for consumers, so it became a win-win situation.

Then the discount stores started to grab market share from the big supermarkets and soon we were back in a price war. With reputations corrected by a few months of local sourcing, supermarkets could bank that and return to what they knew best: driving down prices and squeezing margins. The horse meat scandal could be quietly forgotten and farmers found themselves back in a familiar situation of being the last player in the food supply chain, and the one in the weakest position to maintain prices.

In contrast with last year, beef prices have plunged and the shelves of two of the biggest retailers are packed with southern hemisphere lamb, with the retailers involved deaf to all criticism from farm lobby organisations.

This should all come as no surprise, but what is annoying is the European Commission using these figures to claim its approach to the horse meat crisis worked. When it tightened labelling rules it marched to the tune of the food processing lobby and ignored the European parliament by refusing to extend tougher rules to processed meat, despite it being the main source of fraud along the food supply chain.

With these latest figures it’s probably congratulating itself on avoiding rules that might have hindered the ability of the food industry to buy as cheaply as it can. That failure to deliver a meaningful labelling scheme for all meat products means it has been shelved for the foreseeable future.

What’s even more depressing is how short consumers’ memories are, with the number-one concern just over a year ago forgotten as price reasserts itself as the only real driver of consumer choice.

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