With horsegate continuing to attract significant column inches – with this weeks news that two arrests have been made in conjunction with the scandal – combined with a growing suspicion that ‘porkgate’ might be on the horizon, a warning made by Quality Meat Scotland (QMS) regarding red meat processing will do little to calm the collective nerves of the food industry.

In a note issued yesterday, QMS stated that a very concerning gap is emerging between the true value of beef and the price at which it is being sold on retailers shelves.

Speaking at the launch of QMSs annual review, QMS chairman Jim McLaren said the fact that the retail price of beef does not reflect the genuine cost of beef production and processing was now a very real threat to the future viability of the red meat processing sector.

"The beef processing industry is facing major financial pressure and is struggling to endure the pincer effect of strong cattle prices coupled with the time-lag in retailers passing this raw material price increase to consumers. The result is that our processing sector is enduring margins which are simply unsustainable," comments McLaren.

The latest analysis by QMS looks at beef market trends over the past three years. Since July 2010, the average deadweight price (the price paid by an abattoir operator to a farmer) paid for a steer in GB has risen by 51% from around £2.65/kg to just over £4.00/kg.

However, retail price index data from the Office for National Statistics shows that in June 2013, the average retail price for beef in the UK was just 22% higher than in July 2010.

Mr McLaren and QMS Chief Executive Uel Morton have recently met with processors from businesses throughout Scotland. Each of these processors – along with those in other parts of the UK – has voiced grave concerns about the situation that has emerged.

"If we look at how prices have moved for cattle and beef over a 20-year period, it is very clear that the retail price of beef has lagged behind most other meats and proteins and, until recently, all other foods," notes McLaren.

"Without question, there is a very real opportunity for retailers to address this disparity and move towards a more realistic beef price on the retail shelf and, in turn, an increased return for processors.

"Such a move would be a welcome indication of retailers recognition of the spiralling costs faced by processors, who have also seen a significant increase in labour, energy and distribution costs."

Mr Morton observed that changes in consumer purchasing habits since the horsemeat fraud may also offer an opportunity for retailers to increase prices to more closely reflect higher raw material costs.

– Simon Rowley