The big danger from the current strong export trade for lamb and the accompanying high prices being paid in the market is the downward pressure on home consumption.
Speaking this week, Ian Watson, the chairman of Farm Stock marketing co-operative, said: “We need the comfort of a solid home market with steady demand for sheep meat. History tells us that currency advantages for exporting can disappear as quickly as they arrive.
“The downside of the current strong export market is that high prices have depressed home consumption, which is now well down on previous years. The sheep trade is now heavily dependent on a strong euro.”
He pointed out that the exchange rate was currently running at €1.21 to the £ whereas a year ago it was €1.14. “This difference makes a difference of £5 to £6 per lamb.
“We also have the benefit of lower numbers of NZ lambs coming to Europe at much higher prices and this is allowing us to target traditional importers from NZ. Scandinavian countries for example are now proving to be competitive markets for UK lamb,” he said.
While many industry commentators talked endlessly about food security Watson thought the industry should actually be much more concerned about market security.
Looking ahead to the remainder of the current season’s marketing, he thought that prices would be driven by reduced availability problems.
He also highlighted the long lead-in time that abattoirs operate to and the problems this can give if there is volatility in the market.
Watson’s remarks on the influence of the export trade to the UK sheep sector were later confirmed with the publication of figures showing the UK was now a net exporter of lamb.
This is the first time since 1996 this trade balance has swung in favour of exports, with some 98,500 tonnes of sheep meat going out last year and only 88,000 tonnes coming in.
These export figures put the UK third on the world list of exporters of sheep meat behind New Zealand and Australia.
France was the big market, with almost two-thirds of the total tonnage heading across the Channel but both Ireland and Germany increased their imports last year.
Other EU countries featured on the sales list but non-EU countries – from South Africa to China – also bought lamb from this country. Peter Hardwick, from the promotional body EBLEX said the challenge in the future in the export market was access to markets in such countries as China, Russia, the US and the Middle East.