MEMBERS UPDATE 2ND AUGUST 2024

QMS Monthly Market Update
Beef:
• Prime cattle availability has tightened seasonally after an unusually strong uplift between mid-May and mid-June, supporting a small rebound in prices. As the market had softened in summer 2023, a small year-on-year uplift returned in the second week of July, while the lead over the five-year average has pushed beyond 15% again. Cow prices had stabilised slightly below their spring peak at Scottish abattoirs, with availability for slaughter passing its seasonal low, but there has been a slight rise in mid-July coupled with a renewed dip in throughput.
• Increased prime cattle numbers on farm compared to 2023 have been supporting GB slaughter, which rose significantly in the first half of 2024. Slaughter has been above last year's levels in Scotland since April and this annual comparison is now more reflective of on-farm supply following considerable supply chain rebalancing in recent years.
• Increased domestic production and imports have supported a small increase in market supply in 2024, matching a small increase in the volume of consumer demand, which has been supported by a reduction in inflation. In turn, a well-supplied market has enabled UK export volumes to increase.
• In the short-term, weekly slaughter is likely to remain below the year-to-date weekly average during the summer before picking up into the autumn as the spring calf crop from 2023 reaches abattoirs in greater numbers. However, a higher spring-2022 calf crop and a slight slowdown in the store cattle outflow from the highs of 2022 should still be supporting prime cattle availability in Scotland relative to 2023. The sharpest decline in the 2023 calf crop came during the middle of the year, so it will take time for this to filter through to availability.
• Looking longer-term, the continuing decline in the beef herd in 2024 points to further falls in production beyond 2025.

Sheep:
• After a steep decline in new season lamb prices in the second half of June after the additional demand for Eid al-Adha had passed, the market has stabilised in July, with lambs averaging just over £3/kg lwt at Scottish marts.
• A slow start to the new season has continued, added to by the lack of hoggs left to process. While some of this will reflect a cool, wet summer, lamb supply is set to remain tight, reflecting a smaller ewe flock in 2023 and indications of a second consecutive poor lambing across GB in 2024. This continuing tightness of supply may have put an end to the downwards trend in prices seen in June.
• GB retail data indicates that lamb sales performance continued to look positive in in the 12 weeks to June 9 2024, though with a softer undertone than earlier in the year. However, sales have been falling for cuts other than legs, and ONS inflation data suggests that the surge in farmgate prices has begun to be reflected in retail prices.
• Wholesale prices in France for GB lamb have fallen sharply since Eid al-Adha, but by less than farmgate prices, supporting export margins. However, export volumes will have been restricted by the reduced level of abattoir throughput across GB this summer.
• Lamb produced in Australia and NZ continues to look highly competitively priced, supporting UK import demand along with the underlying tightness of domestic supply.

Pig:
• Pig prices continue to look relatively flat overall, but with the traditional seasonal upswing between spring and summer not occurring this year, it points to some softness. Nevertheless, prices have still been around 20% above the five-year average, supporting the slow recovery of producer finances.
• While the financial crisis of 2021/22 continues to have a lasting effect on prime pig production, GB abattoir throughput does appear to have steadied at around 2023 levels, with some room for a slight recovery in the second half, underpinned by an increase in availability on Scottish farms this year.
• Prime pig slaughter showed some slight recovery at Scottish abattoirs in June despite a seasonal dip in availability, signalling brighter market conditions.
• UK pig market supply has been relatively flat in 2024-to-date compared to 2023. Although increased carcase weights have provided some support to domestic production in 2024, the continuing overall tightness of domestic supply has restricted export capacity, but imports have only edged higher.
• After a prolonged period of stability, EU pig market prices have cooled in July, despite the EU holiday season fast approaching, increasing the competitiveness of EU pork. Meanwhile, although tighter Chinese pork market points to some potential for imports to China to increase, the USDA has revised down its projection for 2024 following a very weak start to the year.

Economic Development:
• Commodity prices have generally been flat at the start of 2024 with only a slight upside impact from geopolitical tensions. However, they remain well above pre-covid levels. A jump in grain prices in the spring has unwound, reflecting a strong start to the US harvest, although UK futures have risen for the new season.
• While strong average earnings growth has continued to support household spending and inflation has now slowed sharply, retail sales showed some significant volatility in Q2, linked to weather patterns, and looked softer than in the early part of the year.
• Red meat continued to show a more positive retail performance in the spring. However, for lamb, it should be noted that sales had a softer period after Easter and, with the ONS inflation data now picking up the pass-through of the surge in farmgate prices along the supply chain, plus reduced domestic production, a period of strength in the first half may be coming to an end.
• Consumer confidence reached a 31-month high in June, as a year of wage growth outpacing inflation and lower energy prices supported by some optimism around the outlook for the UK economy.
• PMI surveys point to a lift in economic activity growth in 2024, driven by the service sector, but with the manufacturing sector's prospects finally starting to brighten. However, the ONS labour market data has signalled a significant deterioration and is something to monitor closely. While measures of employment and unemployment worsened, wage growth held relatively firm at around the 6% mark in the spring, although the single month reading for May was closer to 5%.

Scotland Loves Local Week – 26th August to 1st September

The second annual Scotland Loves Local Week will take place from August 26th until September 1st 2024.
The week shines a spotlight on the critical difference that choosing local can mean to the future of communities – as well as showcasing the tremendous work taking place across the country to build stronger and more sustainable places.
It is organised by Scotland's Towns Partnership (STP), the voice of the country's towns, championing their place at the heart of the nation and advocating their pivotal role in a stronger and more sustainable future.
More information at: Scotland Loves Local Week to return for 2024 – Scotland's Town Centre Recovery Campaign – Home of the Scotland Loves Local campaign. (lovelocal.scot)
Scotland Loves Local Pledge
Businesses across the country are being encouraged to demonstrate their commitment to thinking local first by signing the new Scotland Loves Local Pledge.
The pledge signals an intention to build a better future for communities, with signatories promising to prioritise turning to – and spending with – local people and businesses whenever it is possible to do so, boosting their local economy.
Scotland Loves Local Pledge – Scotland's Town Centre Recovery Campaign – Home of the Scotland Loves Local campaign. (www.lovelocal.scot)

SME Loans Scheme

Loans up to £100k are available to help you pay for energy and carbon-saving upgrades in your business. You could also receive a cashback grant of up to £30k.
What can it be used for?
An SME loan can be used to finance the installation of a range of eligible measures including:
• heating, ventilation, and air conditioning upgrades.
• renewable heat technologies such as installing an air source heat pump.
• improving insulation, draught-proofing, double or secondary glazing,
• installing LED lighting.
• installing solar thermal systems, wind turbines and biomass boilers.
For more information visit the link: SME Loan Scheme · Business Energy Scotland
Updated notice on plastic containers and utensils containing bamboo
Food Standards Scotland and Food Standards Agency advise consumers not to use plastic containers or utensils containing bamboo and other unauthorised plant-based materials. Businesses are reminded not to sell such products as they are non-compliant with legislation and come with safety concerns.

The advice comes after FSS and the FSA told the industry in May 2022 to stop selling food contact materials containing bamboo and similar unauthorised plant-based materials such as rice husks, wheat straw and hemp and called for evidence to assess the long-term safety of these products. More info at: Updated notice on plastic containers and utensils containing bamboo | Food Standards Scotland

Lindsays Solicitors – Employment Law Update (Prism)

The latest issue of Prism which is the employment law update, is located on the members only website.
Includes:-
The new Statutory Code of Practice on Dismissal and Re-engagement
An analysis of the Employment Rights Bill and the Draft Equality (Race and Disability) Bill included in The King's Speech

A copy can be requested from the office.

If you have any questions or queries, please get in touch using the contact details below.

MEMBER SERVICES – Bruce McCall:             [email protected]                01738 637472
CRAFT SKILLS SCOTLAND – Claire Simpson:    [email protected] 4      01738 637785