MLC in the mincer after funding cuts

With the foot-and-mouth crisis still a recent memory, the Meat and Livestock Commission (MLC) is needed more than ever to provide the essential promotional backing to encourage consumers to buy British red meat and enable farmers to at least maintain their market share. But the funds are not there for it to do so.

The MLC has lost about &£7m in revenue since the foot-and-mouth crisis last year. The MLC receives a levy for every pig, lamb and cow slaughtered in the UK for consumption, but the culls instigated by the Government last year to stop the spread of foot and mouth have led to a drop in its levy income for this year to about &£25m. It earned &£32m in levies last year.

As a consequence, 16 job cuts are being made from the 53-strong marketing team, of which ten will be regional education and health sector managers who educate schools, doctors and trainee nurses about the benefits of red meat (MW last week).

The MLC, which does not receive any government funding, is trying to create new revenue streams to make up for this shortfall, although consumer marketing manager Chris Lamb will not reveal what these are. He admits that there is only a 50 per cent chance of creating new revenue streams for the year ending March 2003, and says that increasing the levy in the short term is not an option.

The MLC’s commercial division, which undertakes farm inspections and carcass classifications, made a profit of &£700,000 in 2000/2001, but this is being re-invested in the operation.

Overall marketing spend on beef, lamb and pork was about &£14.1m in 2001/2002, compared with &£17.6m the previous year. Lamb says a new advertising campaign, through BMP DDB, is planned for the autumn, but adds: “We won’t be on television as many weeks this year. How we manage the campaign in terms of channel selection is being decided at the moment, as well as what other media goes into the melting pot.”

Since 1997 the MLC, which last year spent &£4.5m on advertising, has received a European Union grant accounting for up to 60 per cent of this outlay. But the EU has stopped the grant, exacerbating the MLC’s position.

However, Lamb says the cuts will not effect the consumer, retail or export marketing functions.

But the farming industry is champing at the bit. The National Farmers’ Union says in a statement: “Over the past few years we have seen some high-profile ad campaignsBut we need to build on that. Foot and mouth has meant that much work has been put on hold and we have not seen any real progress [in red meat promotion] in the past 12 months.”

The good news for the MLC is that UK consumption of red meat rose steadily after the BSE crisis which struck in 1996. In 1995, 2.47 million tonnes of red meat were consumed in the UK, rising to 2.6 million tonnes in 2000. During the foot-and-mouth crisis last year consumption dropped back to 2.5 million tonnes.

However, an increasing amount of this red meat is sourced from abroad. Farmers have taken years to recover from the devastating impact of BSE, taking time to build up cattle stocks. Others have moved out of cattle farming altogether and into arable. As a result, only 69 per cent of red meat consumed in the UK last year was British, compared with 95 per cent in 1995.

But Lamb is optimistic: “When BSE emerged, people were happy to buy British beef because the Government was honest about the situation, and consumers recognise that foot and mouth poses no danger to humans.”

The manner in which people are consuming their meat is another factor the MLC will have to take into account. IGD, the food research and education body, estimates that retail sales of fresh red meat have fallen by 22 per cent in the past ten years. Meat consumption has stayed high because it is being used to make ready meals instead.

According to Mintel, retail sales of all frozen and chilled ready meals have risen from &£1.2bn in 1997 to about &£1.4bn in 2000, and are showing signs of slowing.

As consumers have no control over the origin of the meat in these meals, the MLC will have to work with the manufacturers to convince them to use British meat in their products.

Lamb says he is aware of this: “We can’t turn the clock back to when people had roast beef every week. What we have to do is make sure consumers are comfortable with meat, however it is consumed.”

BMP DDB deputy managing director John McKnight says the “Tim Nice But Dim” campaign attempted to counter the ready meal trend. “The Tim campaign aimed to show that cooking red meat is not that daunting,” he says.

But he admits that the farming industry sometimes voices concern over the MLC’s marketing.

“It’s no secret that the levy is seen by abattoirs as a tax,” he says. “They are the last to see the ads: we don’t put up posters in the middle of the countryside and they work strange hours, so miss the TV ads.”

Retailers are supportive of fresh red meat but are also realistic. Kevin Hawkins, director of communications for Safeway and chairman of the MLC’s consumer taskforce, says: “I’m more confident about beef and lamb than pork. The use of pork chops as a mid-week meal, for example, is declining and it’s regarded as an alternative to chicken, which is more flexible.”

The MLC also faces another threat – this time from government. The Government is setting up a Food Chain Centre to look at improving the food supply chain, as recommended in a report earlier this year by Sir Don Curry, and the MLC may find that the centre duplicates much of its work. Run by IGD, one of the first tasks of the Food Chain Centre will be to establish how to improve the red meat chain – something the MLC already does.

Curry also recommended clearer food labelling and suggested that the NFU’s red tractor symbol should be the front-runner for this. Lamb says the MLC will have to talk to government to establish how its quality label will fit in with the proposals.

But Safeways’ Hawkins questions whether Curry’s proposals will unravel the good work done by the MLC on labelling and building its brand.

With food habits changing; the Government introducing its own initiatives; and farmers demanding tangible results despite a fall in funding, this year looks pivotal to the development of the MLC.