9.0 Assessment Of The Market
Box 7. Key Findings from an Assessment of the Market
A survey undertaken with interested small-scale farmers/crofters indicated that there was a demand for a local slaughter service, on the basis of the sample considered.
Consultations with existing abattoir operators revealed scepticism surrounding the economic viability of a MSU, however the majority of operators indicated that an MSU is unlikely to have a significant impact on their viability. The exception to this being small island abattoirs, who felt that supporting existing infrastructure should be a priority.
Smallholders, crofters and larger-scale farmers have different motivations in terms of abattoir provision, with many happy with current arrangements, but many others, in particular in areas remote from slaughter infrastructure and/or with niche market positions e.g. organics, low carbon businesses etc that are not content with current arrangements. A more local service is required for this niche market grouping, and the important attitude in terms of this need is whether it would be converted to use of an MSU if this service was made available.
The section considers the views of these key stakeholders, and also the following:
- The impact of regulations on markets and costs/income potential.
- The views of existing abattoir operators and how future mobile abattoirs could impact on their businesses.
- Changes that could make mobile abattoirs more viable – considering feedback from the stakeholder engagement.
9.2 The Demand for a Local Kill Service
The future market for mobile abattoirs in Scotland is likely to be underpinned by the demand for a local kill service. A survey of interested industry stakeholders was undertaken, however it should be noted that the general public & people buying meat may have different views. The following summarises results from engagement with more than 600 respondents, including 209 smallholders, 190 crofters, and 113 larger-scale farmers:
- 552 (91%) of the 604 respondents said “yes” to question 4, asking if there would be customer demand for locally sourced, traceable meat arising from a mobile abattoir.
- 538 respondents said that mobile abattoirs have the potential to provide their smallholding/croft/farm with a value-added service, by providing private kill and traceable meat products.
- In terms of the most popular model for using an abattoir, this involved one coming to a third-party location, with 488 respondents indicating their interest in using such a service (83%).
Figure 3 indicates that the following were the drivers stated by respondents (in an open part of the survey where any further comments on MSUs could be left), in terms of why people would want to use an MSU service:
- Animal welfare: to minimise the distances involved in moving livestock from where it has been reared and/or finished to where it is then slaughtered. In the process this will provide higher quality meat from animals which are stressed less than they may be if moved over much longer distances.
- Provenance and local sales: a local kill service is considered by many stakeholders to provide small-holders, crofters, farmers and butchers with the potential to generate meat sales with local provenance.
- Essential service: there are views that the rural way of life in Scotland is under pressure from many different sources, and the loss of abattoirs in many parts of the country compounds this – with the potential for cultural, economic and environmental impacts.
In terms of the final point above there are significant bodies of research now undertaken which consider the challenges, threats and opportunities associated with crofting, smallholding and farming – these are widely covered in many other programmes and areas of research and do not therefore form a part of the market assessment work described in this section.
9.3 Market Implications of Regulations
The Regulatory Review section of this report provides a description of the key controls that have to be incorporated in the design and operation of a potential future service. In terms of the costs associated with regulations and the impacts specifically on MSUs, these are comparable to small-scale abattoirs currently operating (e.g. the island abattoirs). An important example of how costs are applied concerns the OV and MHI requirements, where there are significant differences in the fee structure when comparing small-scale abattoirs and larger facilities. Significant discounts in OV and MHI costs are available for an MSU operating below the throughput thresholds described, starting with 85% of the inspection costs, for the lowest throughput operation, covered by FSS.
This means that for facilities operating at this scale, one of the key issues often reported about the potential of MSUs, the regulatory costs, may be overstated. However, this is not to diminish the complexity of operating an MSU such that it is compliant with regulatory requirements. This does not mean that there could be any reduction in the standard of regulation or governance regimes.
The significance of the costs associated with OV and MHI inspections is considered in the cost benefit analysis work carried out and described in the Operational Model section of this report.
9.4 Market Implications Considering Existing Abattoir Infrastructure
This report describes how engagement with existing abattoir infrastructure in Scotland has provided different views on the potential impacts of MSUs. A total of 12 abattoirs have been engaged with through discussions and meetings, with a small number (three) responding to the online survey. The views expressed can effectively be split into two:
- Existing, Scottish mainland abattoirs: Feedback from the online questionnaire, private discussions, and a Council meeting of SAMW indicated that MSUs would not be considered a threat to existing abattoir business. Though sceptical of the potential of MSUs, it was commented that they recognises that if they do move forward they are likely to be targeting niche markets.
- Island abattoirs: Two individual abattoirs responded to the Scottish survey, via personal discussions, and the Scottish Craft Butchers survey. These responses indicated that they would not be supportive of government support to any future mobile abattoir service, and that they had concerns about the potential impacts of such a service on their business models. Their view is that a local service is best provided through the establishment of small, fixed abattoir infrastructure.
One of the 12 abattoirs above is a micro-abattoir, operating on the mainland whose business model would be unlikely to be affected by an MSU.
9.5 Demand Driven by Local Meat Provenance
No market research has been identified, carried out specifically in Scotland, to understand what customers may be likely to pay for local food such as beef, mutton, lamb and pork products within the desk-top review, however there may be internal research held by QMS/Scotland Food and Drink (for example) that quantifies this. However, there are farm shops in Scotland selling meat sourced from their own livestock which are thriving and therefore are also demonstration of how provenance and well-marketed products can foster business success.
A desk-based review of provenance and the market potential associated with this was carried out more widely than the Scottish context. The key words “meat provenance market value” and “meat traceability market value” were used in an online search and this limited review provides data extracts from the following sources, which provide indications and information on the importance of local kill, at the very least to niche markets:
- “The Grocer”: A 2018 survey, “How much do shoppers care about traceability of meat 
- AHDB Beef and Lamb, 2016, “The role and value of independent butchers in England”
- QMS Red Meat Industry profile (2018)
- IGD Shopper behaviour red meat category (February 2019)
The findings of the above are presented for indicative purposes only, with much more significant work required in this area to understand the scale of the opportunities, and regional/local differences and opportunities in Scotland.
The “Grocer” research was described as being based on the polling of more than two thousand people in Britain (number in Scotland not stated, nor other socio-economic characteristics of the population), to explore shopper attitudes. Figure 7 below is an extract from this survey indicating the top considerations of people polled.
The AHDB report looking at England made 22 references to “provenance” and “traceable”, with none to “welfare”. In terms of the former a number of significant statements were made, for example:
“…butchers are united in the view that a continued focus on quality, provenance and customer service will be essential to successful trading.
Most of the butchers we spoke to agreed that food scares such as the horse meat scandal have positive implications for butchers, as consumers become more interested in the provenance and quality of the meat they buy.
Having a local, traceable supply chain ensures that customers can trust the products. In addition, some butchers felt that their supply of local products is part of their ability to offer consumers something different (and, in their opinion, superior) to the products offered by the supermarkets.
Satisfying and retaining regular customers is therefore essential to the continued viability of many independent butchers. These regular customers prioritise quality, provenance, and customer service ahead of other considerations, such as price.
…there is a future for independent butchers, provided they continue to focus on the quality and provenance of their product and ensure that the standards of customer service exceed those available at larger retailers.”
It is understood from discussions with Scottish Craft Butchers that local meat provenance has the potential to generate added value and new sales for its members. Although there are a number of niche, high value farm shops in the country, selling premium products to high value outlets, it could also be argued that this is under pressure with the loss of local abattoir provision, as well as reduced levels of opportunity and/or increased costs associated with arranging private kill, for local sales.
The category benchmark research indicated that shoppers are more willing than the average category to pay extra to get better quality fresh red meat. Fresh red meat shoppers value the origin, animal welfare standards, taste and texture of the products. The same research indicated that “ethical” product concerns are strongest in fresh red meat. 70% of shoppers in fresh meat say that ethical production is an important driver of product choice – up from 58% last year. Product origin is also highly important to fresh red meat shoppers.
9.6 Market Demand Driven by Animal Welfare Concerns
As indicated and discussed previously animal welfare has been brought up consistently in stakeholder engagement work, through surveys and direct engagement, as a reason for why people want to have an MSU service available to them locally.
IGD research indicated that 41% of shoppers, and 51% of 18 - 24-year olds, cite ethical concerns as a motivator for not eating meat. While only a small percentage have stopped consuming meat entirely, this number is likely to rise with 68% of 18 - 24-year olds either reducing or considering reducing their meat intake. There is therefore a potentially increasing market for producers of ethical/ known provenance meat.
In addition, important and influential organisations such QMS and the SPCA can be considered in this context. QMS has stated that it endorses the Scottish SPCA’s desire to see healthy and well cared for animals and has made a commitment through its Animal Welfare and Wellbeing Charter that it is working to have these principles being driven through all stages of its whole chain assurance on a ‘whole of life’ basis. The organisation has stated that it is committed to ensuring that all farmed cattle, sheep and pigs in its Quality Assurance Schemes have the best possible quality of life and that handling of these animals in the live supply chain is based on the principles of “the Five Freedoms” at all times:
- Freedom from hunger and malnutrition
- Freedom from discomfort
- Freedom from pain, injury or disease
- Freedom to express normal behaviour
- Freedom from fear and distress
Another important organisation which has the potential to influence behaviour with respect to animal welfare is the AHDB. In its 2018 publication, “Marketing prime beef cattle for better returns” it provides guidance to beef producers:
“In order to maximise their financial returns, beef producers need to produce and sell the type of finished cattle markets really want and are willing to pay the most money for.”
In this document there are no references to distances travelled by animals, and two references to animal welfare:
“…stock that passes through an assured supply chain can carry the Red Tractor logo and Quality Standard Mark on pack. These schemes give consumers confidence in the provenance, traceability and welfare of the animal. Sensitive handling is vital for animal welfare and to minimise damage that shows up after slaughter.”
9.7 Learning from Best Practice Marketing Initiatives Around the World
Although in its early days, the Provenir mobile abattoir in Australia provides what could be an interesting example of innovative marketing of an MSU service, coupled with engaging, online marketing of the resulting products, for purchase directly off their website. This is a model which is likely to resonate with many of the stakeholders responding to the survey described previously in this report.
9.8 Changes that might help to improve the viability of existing small abattoirs in Scotland
Consultations with stakeholders consistently listed i) regulation, ii) waste, iii) staffing issues and iv) costs (of competing with larger abattoirs with high throughputs) as significant barriers to small abattoirs.
The cost benefit analysis carried out in the following section considers the final point, and quantifies some of the key issues/barriers that have been raised in various form about MSUs, in terms of costs, often associated with waste management, veterinary costs and the cost of compliance (with regulations). Discussions with the regulators have informed the position with respect to veterinary and waste compliance costs, and for a well-managed MSU operation may not be considered too onerous. The cost of waste collection is more challenging, and this is covered in the CBA in the following section.
The UK Government All Party Parliamentary Group on Animal Welfare (APPGAW) is currently conducting an enquiry into the loss of small abattoirs and its effect on animal welfare and the rural economy, the findings of the enquiry are yet to be published, however may provide some insights into changes that might help improve the viability of existing small abattoirs in Scotland.
In terms of how the business models developed in the following section important aspects for consideration of a viable MSU service include:
- Transportation and in particular, ferry charges are a significant cost in terms of the viability of services on the islands. Discussions (e.g. with NorthLink Ferries) have not identified any discounting potential associated with an MSU service to Orkney (e.g. road equivalent tariff or others).
- Development of docking bay location and waste storage infrastructure. This approach has been incorporated within the operational models described later and are important in terms of providing staff with animal handling skills, utilities (drains, lairage, water, electricity) and an organised management and logistics model which allows scheduled events to take place and be planned for.
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