Lamb producers are losing an average of £29 a head, after prices reached their lowest level since November 2009.

Plagued by cheap imports and subdued export demand, R3L prices averaged 337.5p/kg in the week to 5 January – 12.7p/kg lower than last week and 118.8p/kg less than at the same time last year. “We are faced with really challenging conditions on the world market while seeing a considerable reduction in the price that our retailers pay,” said Charles Sercombe, NFU livestock board chairman. “Prices to the consumer and demand have remained high, so where is the money going?”

Despite a 14% fall in average farmgate prices between August and November, retail values increased by 1.8%, according to data from EBLEX. Farmers only received 45.4% of the retail price in November – the lowest since July 2009 and well below the 53.9% share three months earlier. At the same time, retail sales actually increased by 3.8% in the year to 25 November, with consumer spending up by 4.2%.

Greg Mowbray, managing director at marketing group Meadow Quality, said the short-term outlook was not particularly bright due to sluggish demand and slow finishing conditions. “There are a lot more lambs still on farm due to poor weather, with slaughter numbers 600,000 behind the same time last year.”

Liver fluke was a big problem in the North, with many producers selling under-finished animals now, rather than risk losing them, said Carlisle auctioneer James Little. Some abattoirs were cutting back to operating just two days a week. “There has been more lamb coming in from New Zealand – most supermarkets don’t care where they get their lamb from; it’s all to do with the price.”

Imports during October were 27% up on the previous year, with import prices down by a quarter, said the EBLEX report.

Demand for store lambs was also slow, due to a lack of forage, said Exeter auctioneer Russell Steer. Schmallenberg was posing another challenge, with some early lambing flocks losing up to 50% of production. “It is fairly widespread and even the main lambing flocks are finding problems. On the plus side, with finished prices where they are we should be better able to compete on domestic and export markets.”

 Industry response 

 The retailers

 The farmer

Morrisons and Tesco have both said they are committed to offering customers options across a range of budgets, including both British and New Zealand lamb.  Colin Rowland, who keeps 1,000 ewes at Wick Farm, Bampton, Devon, says farmers cannot produce lambs for £60 or less. “We need to be getting at least £80 a head to make a living. “Everyone has struggled to finish their lambs this year because of the bad weather, and at these prices it would have been better if they’d never been born. If people can’t make money they will give up on sheep; it’s just not sustainable. The NFU needs to bang the supermarkets’ heads together.”

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