Quite lovely logic here:
While supermarket bosses insist they have stringent systems in place to guarantee product quality, what they will not discuss is the impact of the brutal deals they enforce upon the companies that manufacture those products for them.
The manufacturers do not want to talk publicly about it either, for fear of enraging their key customers. Privately, however, they regularly report being forced to sell to the supermarkets at break-even or below the cost of production or risk being de-listed. They’ll do anything to avoid being de-listed because once off the shelves it’s a massive struggle to get back on. As a result, they’ll take the deals, and the financial hit, in the hope that the price will pick up in the future. And it’s when money gets tight that corners are cut.
Low prices, low profit margins, mean horseburgers.
The potential appearance of actual horse meat in burgers is a separate issue and that’s down to the cost of beef, which has reached historic highs. According to Index Mundi, which tracks commodity prices into the US, the current deadweight price for beef – the whole carcass – has just hit the equivalent of £2.75 a kilo, close to a price doubling in just four years.
It’s a similar story in this country. According to Eblex, the trade organisation for the beef industry, the key measure for top quality beef prices has gone from just over £2 a kilo in 2006 to £3.77 a kilo last week. As ever, that’s a function of supply and demand. Most beef animals are fed on grain. In 2008, massive price spikes in the cost of corn and soya presented beef farmers with major cash flow problems. Feeding their animals had just become too expensive. As a result, vast numbers sent not only their prime beef animals, but also their breeding herds, to slaughter.
Five years on and there is a shortage of new beef animals, combined with an uplift in demand for meat from emerging economies.
High prices, high profit margins, means horseburgers.
Thus, err, any prices, any profit margins, means horseburgers.