Finnish beef production down, pork up

In the course of the current decade, the production of Finnish pork has increased every year, while that of beef is now down at the same figures as more than 40 years ago.
     
Last year the production of beef fell to a record low, in fact the lowest since 1962.
      The volume of cattle slaughtered was nearly seven million kilos lower than in the previous year.
      In Finland, the production of beef is tightly linked with the production of milk. Typically, bull calves, surplus heifers, and those cows that no longer produce milk are slaughtered.
      Beef cattle to be slaughtered to produce meat are not raised in any large numbers in Finland.
     
There are many underlying reasons behind the fall in the production of beef, not least the fact that the size of the dairy stock has been reduced year by year.
      As a consequence of the fact that one animal has only a limited amount of valuable parts and that some meat processors are even suffering from a shortage of animals, the consumer prices of those valuable parts in particular have increased.
      Apart from the price, even the Finns’ eating habits have changed, resulting in an increasing leaning towards poultry.
     
The Finnish meat-processing company Atria has gradually increased its share in the Finnish beef market. Atria is Finland’s largest beef processor, with an annual production of 35 million kilos. The total volume of the Finnish beef production is 82 million kilos annually.
      By comparison, in 2008 the beef procurement of LSO Foods, the company supplying beef to the Finnish food processors HK Ruokatalo and Järvi-Suomen Portti, remained at 22 million kilos.
      According to Juha Gröhn, the Managing Director of Atria Finland, the company has managed to maintain the same level of procurement and sales as before, even though the total volume of production has declined.
     
In other words, the competitors have been losing market share.
      Gröhn claims that there has been even a surplus of beef for Atria, while Jari Leija, the Managing Director of HK Ruokatalo, reports that there has been a shortage of beef on the market.
      ”One-fifth of the total consumption is imported to Finland, and particularly in the summer there is a shortage of valuable cuts”, Leija argues. Most of the beef is imported from South America.
     
The producer gets a little less than EUR 3.00 per kilo for beef on average.
      The producer prices of beef have increased in several successive years.
      Last year the highest prices were paid for bull beef. According to data collected by the Information Centre of the Ministry of Agriculture and Forestry (TIKE), in 2008 the producer price for bull beef was the highest, namely EUR 2.80 per kilo, while the average producer price for heifer beef was EUR 2.25 per kilo.
      According to TIKE, the nominal prices for bull and heifer beef were higher than ever before since Finland joined the European Union.
      However, when taking into account the consumer price index , the real prices were at their highest at the beginning of the EU era, while last year’s producer price level was some 16 to 18 per cent lower.
     
In 2008, Atria disturbed the beef market with so-called selective price setting. Some producers were paid a generous surcharge on top of the agreed list prices.
      Since then such surcharges have been abandoned by Atria even though the practice is common in the meat sector, Gröhn reports.
      According to Gröhn, the purpose of the additional payments was to hold on tightly to the producers. Moreover, premiums were used to acquire more meat when a shortage of beef was threatening during special offer campaigns.
     
Premiums were paid chiefly to some major producers who could deliver large consignments which made sound sense with respect to transportation.
      It has been estimated that some individual additional payments amounted to as much as EUR 50,000. However, Atria’s Gröhn was unwilling to comment on the size of the sums.


Previously in HS International Edition:
  Finnish Atria also wants to buy Swedish Meats (29.11.2006)

Links:
  Atria Plc
  Information Centre of the Ministry of Agriculture and Forestry (TIKE)