“In the week to 12 January, hogg prices have averaged 265p/kg, around 3.5 per cent below the 275p/kg average through November and December”, said Quality Meat Scotland (QMS) economist Iain Macdonald – but he also pointed out that while a similar figure had been achieved in January last year, prices were still running around 30 per cent above their five-year average for the month.
Giving QMS’s latest analysis of market trends, Macdonald said that firm farmgate price levels had historically been driven by tight supply, caused by reductions in both domestic production and imports.
“At UK level, Defra reports that sheepmeat production declined by another 10.5 per cent in 2021, having fallen almost four per cent in 2020,” said Macdonald. “Meanwhile, HMRC figures show that import volumes contracted by 16 per cent in the January to October period, having fallen for seven straight calendar years.”
Admitting that a reduction in the level of the UK’s own exports would have offset some of the decline in total market supply, even after adjusting production for net trade it was believed that supply could have fallen by nine per cent in 2021 to stand around 14 per cent below the five-year average.
He said that in addition to tight supply, firm demand had also added to the upwards pressure on farmgate prices, with the statistics showing that GB households spent nearly three per cent more buying fresh lamb in the 52 weeks to Boxing Day than a year earlier, despite a return to more dining out through the summer and autumn – and significant price inflation.
Commenting on the fact that shoppers had seen more New Zealand lamb on the supermarket shelves in the run-up to Christmas, Macdonald said that while overall imports had been down, the high demand for leg roasts had seen retailers import more.
But while this was often viewed as a betrayal by the supermarkets, he said it was worth noting that if domestic production rose to meet the higher level of demand for these cuts, it was likely that processors would have been left with a significant challenge of carcase balance.
He added that imports tended to rise seasonally in November and December from an annual low in October – but while it often accounted for 26 per cent of total market supply at that time of year, this figure was probably closer to only 20 per cent over that period in 2021.
However he admitted that with New Zealand lamb accounting for as much as 36 per cebnt during the pre-Easter period, the free trade agreement between the UK and New Zealand had been a prominent topic of discussion over the past year.
But he pointed out that with strong demand continuing for NZ lamb in China, the greater carry-over of UK hoggs into 2022 could boost the domestic product’s market share this spring.