Feel­ing the churn

Af­ter virus took a chunk of cheese makers’ prof­its, ar­ti­sanal pro­duc­ers hope to soon be on a roll

The Daily Telegraph - Business - - Front Page -

The coro­n­avirus pan­demic has had a pro­found im­pact on one corner of global trade: the whole­sale price for ched­dar on the Chicago Mer­can­tile Ex­change has fluc­tu­ated wildly. While mid-April saw a 40lb block of ched­dar hit a low of just $1 (82p) a pound, by June 9 the price had soared to $2.81 – a record high.

Such vo­latil­ity is ex­treme even for US ched­dar, a com­mod­ity that has had its fair share of swings in the past two decades, and that is still traded in 10-minute daily bursts on the CME. But are th­ese gy­ra­tions matched on the other side of the pond, and do they pro­vide any hope for Bri­tain’s army of cheese makers?

In the UK, cheese prices over­all have re­mained rel­a­tively sta­ble, but some sec­tors of the mar­ket have seen sharp swings as the dis­rup­tion be­gan.

With schools closed and peo­ple stay­ing at home, su­per­mar­ket sales have surged.

“Sales of ched­dar and ter­ri­to­rial cheeses – ‘fam­ily cheese’ as op­posed to ‘cheese­board cheese’ – saw sig­nif­i­cant lev­els of growth in that time,” says Nigel Murray, chief op­er­at­ing of­fi­cer of Booths Coun­try su­per­mar­kets.

Makers of ar­ti­san cheese, how­ever, were hard hit by the clo­sure of the hos­pi­tal­ity sec­tor that they had supplied through whole­salers. This left them with large quan­ti­ties of per­ish­able stock that needed mov­ing.

“From the mid­dle of March to the end of April, makers of cheeses with a rel­a­tively short shelf life – like soft or blue cheeses – were re­duc­ing prices, in some cases sig­nif­i­cantly,” says Ja­son Hinds, sales di­rec­tor and co-owner of cheese re­tailer Neal’s Yard Dairy.

Jamie Mont­gomery, maker of an ac­claimed farm­house ched­dar in Som­er­set, saw his sales plum­met. “The first two weeks were pretty scary. No or­ders at all from any­body.” His re­sponse was to cut down on pro­duc­tion. “We’re mak­ing for a year ahead, so we had to gauge how much less ched­dar we were sell­ing and then guess for how long that short­fall in sales would be. We fin­ished up mak­ing four days a week in­stead of seven, for the best part of eight weeks. We lost about a month’s worth of cheese.”

In re­sponse to the cri­sis, Booths Coun­try su­per­mar­kets ran a price­based cam­paign in April to sup­port farm­house cheese makers. “In the case of Gra­ham Kirkham’s Lan­cashire cheese, we took a third out of the price to in­cen­tivise our cus­tomers. We didn’t pay Gra­ham any less for his cheese and we bought and sold more of it,” says Murray.

The ex­port mar­ket for Bri­tish cheeses, in­clud­ing clas­sics such as ched­dar and stil­ton, has been af­fected by a num­ber of fac­tors. The Air­busBoe­ing dis­pute be­tween the EU and the US has led to the im­po­si­tion of US tar­iffs of 25pc on cheese from the EU.

Neal’s Yard Dairy, which ex­ports Bri­tish cheeses to Amer­ica and Europe, re­ports that the US mar­ket is still very quiet. The im­pact of lock­downs across Europe on its ex­ports to the Con­ti­nent has been sig­nif­i­cant. In April the com­pany sold less than half of what it had ex­pected. May saw an up­lift, while “June cheese sales to Europe were very strong”, says David Lock­wood, man­ag­ing di­rec­tor.

One pos­si­ble source of an up­ward pres­sure on cheese prices in the UK would be a no-deal Brexit at the end of De­cem­ber 2020. The UK im­ports a sub­stan­tial amount of ched­dar from Ire­land. Tar­iffs im­posed on cheese from the EU in the event of no-deal would in­crease its cost.

In prepa­ra­tion for this even­tu­al­ity, Ir­ish pro­ces­sors are stock­pil­ing cheese in the UK as a safe­guard. Last De­cem­ber, the Agri­cul­ture and Hor­ti­cul­tural De­vel­op­ment Board re­ported that im­ports of Ir­ish ched­dar to the UK were on track to be the high­est for at least 20 years. The UK is not self-suf­fi­cient in cheese, so in­creased tar­iffs on cheese im­ports could drive de­mand in the UK for do­mes­ti­cally pro­duced milk and dairy prod­ucts. An en­vi­ron­men­tal fac­tor that might also in­crease dairy prices is the lower milk yields caused by cur­rent dry weather con­di­tions in the UK and Europe.

A sec­tor of the cheese mar­ket in the UK that is see­ing a rise in prices is ma­ture ched­dar. This is due to high de­mand and a short­age of sup­plies.

This month trade magazine The Gro­cer re­ported that Sa­puto Dairy UK had with­drawn its Cathe­dral City ex­tra ma­ture from sale due to “un­prece­dented de­mand”.

“The last four weeks have seen a real resur­gence in de­mand for ched­dars of greater ma­tu­rity, so ma­ture and es­pe­cially ex­tra-ma­ture or vin­tage,” says Giles Bar­ber, di­rec­tor of Bar­ber’s Farm­house Cheeses, the UK’s largest in­de­pen­dent fam­ily cheese-mak­ing busi­ness.

“Whereas the younger pro­files of ched­dar tend to get used in food ser­vice, the re­tail de­mand is much stronger for the high-end, high-flavour pro­file, so there’s been a real draw on a lim­ited stock. That means more com­pe­ti­tion in that sec­tor for sup­ply of those cheeses, so we’re start­ing to see prices of those cheeses rise.”

For ar­ti­san cheese makers and whole­salers who sup­ply hos­pi­tal­ity, there is cau­tious op­ti­mism about restau­rants re­open­ing from next week. “While it’s great news that restau­rants will start to open in early July, they’re not all go­ing to re­open,” says Hinds of Neal’s Yard Dairy.

“It will be bet­ter than what we have now, but they’re plan­ning for only half the level of busi­ness, so cheese makers are fac­ing a short­fall. I think we’ve still got a long road to travel.”

‘The last four weeks have seen a real resur­gence in de­mand for ched­dars of greater ma­tu­rity’

The Neal’s Yard Dairy shop in Covent Gar­den, Lon­don, which saw pro­duc­ers cut the price of cheese with a short shelf life in the first weeks of lock­down

SOURCE: CHICAGO MER­CAN­TILE EX­CHANGE/BLOOMBERG

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