Better prime lamb prices could hold into 2009

Prime lamb prices have remained relatively bright in the sheep sector throughout 2008 and these conditions look set to remain into 2009, says business consultant Andersons.

New season lamb values peaked at the start of April at over 400p/kg deadweight, and have remained relatively strong compared with recent seasonal averages. The main reasons have been falling sheep numbers both in Europe and New Zealand, and the weak pound making UK exports more competitive, said Andersons’ head of research Francis Mordaunt. 

These conditions look set to remain through into 2009. The June 2008 DEFRA survey indicated  that the national breeding flock was over 3% down on the year. The number of gimmers (ewes intended for breeding for the first time) was down almost 6%.

“Even if better weather at lambing in Spring 2009 means the lamb rearing rate is higher than last year, the overall domestic supply of lamb will be, at best, equal to 2008. Import competition should be limited by flocks declining right around the world, and sterling’s continued weakness against the euro. Price prospects for 2009 therefore look to be at similar levels to 2008”, said Mr Mordaunt. 

For many sheep farmers, higher prices are being more than offset by higher costs. Industry figures continue to suggest negative margins from many sheep systems, when single farm payments are excluded.

“Producers with low-input forage-based systems capable of producing good levels of output per ewe will be the ones who can be cautiously optimistic going into 2009. The labour bill often represents over 25% of total flock costs. Innovative labour saving ideas which get the job done without compromising performance are becoming increasingly important,” Mr Mordaunt said.

The part of the industry which remains most at risk is the hill sheep sector. “The fact that the national flock has dropped, whilst sheepmeat production has been relatively stable, perhaps indicates the reduction in ewe numbers is tending to focus on less productive ewes from the hills. Certainly the regional survey figures indicate Wales and Scotland are losing breeding sheep much faster than England.”