Key opportunities identified for lamb market

Quality Meat Scotland (QMS) has identified two key areas of opportunity for the lamb market.

They are: consolidation and growth in the domestic market, following recent gains; and maximising export opportunities other than France.

Stuart Ashworth, head of economics services with QMS, identified markets such as Denmark and Sweden as offering real opportunities for the lamb market, and is working hard to develop these markets further.

“Looking at the current market situation for lamb, a real challenge lies in export activity where trading has been difficult despite the attraction of current exchange rates,” commented Ashworth. “Exporting lamb to Europe and France in particular has been challenging over the past six months.”

Ashworth acknowledged that this isn’t just a British problem, with French trade data suggesting that French imports have been lower than last year throughout October to January.

“Both the UK and Ireland supplied less lamb to France in this period,” he explained. “Some of this loss was taken up by increased supplies to France from New Zealand between October and December, but New Zealand shipped less lamb to France in January.

“Furthermore, on the evidence of French data, sheepmeat consumption in France has been falling steadily for a number of years, with consumption in January down 3% compared with a year earlier.”

Despite this, he said that more of the northern European countries are experiencing more stable demand. For instance, during the month of February, Germany, Denmark, Belgium and the Netherlands took slightly more sheepmeat from the UK than they did the previous year, “though currently not sufficient to offset the fall in volumes to France and Italy”.

Ashworth said that when looking at recent prices, it is clear that as the 2015 lamb crop year draws to a close and Easter has passed, prime hogg prices have come under pressure.

“It is not unusual for prime hogg prices to come under pressure at the conclusion of the lamb crop year and the fall in prices during the past week, although substantial, has not been as dramatic as last year. In the current week, prime hogg prices are only 1-2% lower than last year.” According to Ashworth, this compares with earlier in 2016 when the price was 4-5% lower than last year.

Meanwhile, auction market and abattoir throughputs over the past four weeks have shown a decline in comparison to last year, in both the volume of SQQ [standard quality quotation] hoggs and total number of hoggs marketed.

“The auction throughput has shown a higher proportion of SQQ hoggs in the total slaughter hogg marketings compared with last year, up until the past week,” explained Ashworth.

“Similarly, until the past couple of weeks, the proportion of hoggs slaughter in price-reporting abattoirs which had met the preferred R3L or better grading had been running higher than last year.”

Based on this evidence, hogg quality has been good since the turn of the year, despite slightly slipping in recent weeks.

“Carcase weights have not been an issue either, as they have been lower than last year since January and the volume of domestic prime sheepmeat on the market has been lower than last year. Indeed total domestic sheepmeat production, including cull stock, is slightly down on the year over the first quarter.”

Farmgate prices falling alongside lower production is an indication of the wider challenges affecting demand. Part of the explanation for this is the impact of the reduced demand from key export markets such as France, particularly in light of evidence of increased demand in Great Britain.

Data taken from Kantar Worldpanel indicated that the GB market shows the volume of lamb sold by retailers in the nation is running ahead of last year for the past quarter, although with some variation between cuts. This has been achieved with little recourse to retail price discounting.

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