Welsh red meat industry looks to 2016

Supermarkets have been encouraged to support the Welsh livestock industry in the coming year by avoiding “the shattering shards and spikes of oversupply that puncture prices and splinter our industry”, Hybu Cig Cymru – Meat Promotion Wales’ (HCC) chairman Dai Davies told an audience at the Royal Welsh Winter Fair.

“Collective responsibility for delivery is the only way forward and it is vital that our local butcher’s shops and, crucially, our supermarket outlets step up to the plate and stock, promote and sell our PGI-branded products,” said Davies.

“I believe our multiple retailers increasingly understand they have to balance a moral responsibility for the domestic economy with a commercial necessity, to maintain a consistent supply to their customers and avoid, however tempting, the short-term opportunistic returns that provoke the shattering shards and spokes of oversupply that puncture prices and splinter our industry. Collectively we all have a role in finding a workable supply solution.”

According to Davies, the average Welsh farm is around £7,000 worse off as a result of the sterling-euro exchange. He claimed that just two years ago, the pound was worth €1.16, while today it stands at €1.43. “We are getting short-changed. Each sheep on your farm is worth £60 today, instead of the £72 it was at Winter Fair time, two years ago.”

He highlighted that living and working in a global marketplace creates uncontrollable turbulence. Aside from exchange rates, he noted that “supply fluctuations” and “market manoeuvrings” have resulted in cheaper imports, primarily from New Zealand.

Despite this, Davies believed the global marketplace provided huge opportunities for high-quality PGI Welsh Lamb and Welsh Beef.

“Industry experts say there will be a little less production in Australia and New Zealand in 2016 because of adverse climate impacts and that may have a positive effect on prices here for a while.”

According to Davies, the greatest asset that Wales has is its farmers. “In Wales, we produce premium lamb and beef that competes with any in the world and that’s because of the resilience, experience and diligence of our farmer champions.”

However, his optimism was tinted with challenges facing the industry. The main obstacle to overcome is that unless a profit can be produced within market price, the industry will remain unsustainable. HCC reported that the latest statistics on farm cost production show that the challenge remains “stark as it has ever been”. Overall costs rising, coupled with a portion of Welsh farmers unable to cover costs of production, adds to the struggle.

While exports may be comparatively cheaper as a result of the euro, they are still important in achieving sustainability, increasing demand by an estimated 30%.

“HCC’s role is to facilitate exports. Exports underpin domestic prices. Without exports, Welsh Lamb prices this year would have been substantially lower,” commented Davies.

Regardless of the uphill climb, the industry was commended for the support of HCC’s marketing activity throughout the country.

In order to achieve the commercial and environmental sustainability demanded of it, Davies highlighted that the industry was at the beginning of change. “HCC is perfectly placed to facilitate this change, positioned between government and industry, ensuring that demanding outcomes are met and aspirational ambitions are achieved so that we are able to take advantage of the exciting opportunities that are ahead of us in the coming years.”

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