Why you need to meet your suppliers in the flesh

Buyers need to satisfy themselves that the meat they are buying is what they think it is. By David Read, chairman of Prestige Purchasing.

Benjamin Franklin once wrote: “Nothing in this world is certain, except death and taxes.” Food scandals might be an obvious addition to this statement. Whether it’s horsemeat in the lasagne, bribes and chemicals disguising rotting Brazilian beef or untrained workers packing your chicken, there will always be someone not looking after your interests quite as well as you would like.

The UK Food Standards Agency (FSA) is charged with providing an audit system that protects consumers from poor hygiene and slack food safety procedures, as well as spotting any dubious practices. Its recent interventions at 2 Sisters Food Group and latterly even closer to home at Russell Hume have put the risks within meat production into sharp focus for our sector.

And there have certainly been some interesting effects. A £100m-plus business like Russell Hume suddenly closing its doors had an instant impact on markets. Many commentators focused on how competitor catering butchers were picking up the business, but for me it was the effect on markets that supply these businesses that was more interesting. In the weeks following Russell Hume’s closure the price of UK steak meat from primary markets rose, while import prices fell. This might be because UK meat exports have been rising fast due to the weak pound, but the timing doesn’t appear to match – the pound has recently been recovering.

So, what other explanation can there be? I spoke at length in recent weeks to many senior figures in the meat industry, and some have suggested other reasons for the sudden change. The 2013 horsemeat scandal created a significant shift in sourcing strategy in supermarkets and caterers alike. The fashion for buying British became dominant, with many of the leading food retailers still buying 100% from home markets five years later.

With the growth of export sales in recent times, many are questioning whether the temptation to amend the country of origin on labelling in significant scale has just become too great. I believe that the vast majority of UK catering butchers are running excellent businesses with high standards but, with many running at just 1% to 3% net margin, the incentive certainly exists.

And the recent enforcement by the FSA of what were previously just guidelines on the date labelling of cut steaks has reduced the time from cutting to consumption by a couple of days. The effect has been minimal for those butchers operating a low-stock/just-in-time process. But for others it has necessitated major changes to process and stock management, driving up costs and impacting margins.

So what implications does all this have for buyers? When the Russell Hume story broke, some said it was an example of how government cuts to inspection budgets were allowing poor standards to become the norm. Others pointed out that the discovery of the problems was evidence of the exact opposite.

What it says for me is that buyers cannot rely on the FSA alone to ensure that what comes in via the back door and is then cooked for their customers is what it says on the menu. Visiting suppliers and auditing their policy, processes and governance is the kind of due diligence that is now even more essential to both shareholders and customers.

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