UK sheepmeat supplies will remain tight in the year ahead and EU production will fall even further, EBLEX has forecast.

Total production in the UK will drop from 290,000t in 2013 to 287,000t, with a slight reduction in both adult kill and lamb kill, senior analyst Paul Heyhoe told the AHDB Outlook conference in London.

UK imports this year will fall from 113,000t in 2013 to 100,000t and exports will drop from 106,000t to 102,000t, as supply tightens across the world.

Tighter European supply was a good sign for UK producers but the main challenge was profitability, Mr Heyhoe said.

See also: Lamb prices rise on tight supplies

He said average farm business incomes from agriculture on sheep farms saw a £7,000 loss in lowland areas and £9,000 in less favoured areas in 2012-13.

In 2012, the net margin per ewe in the most profitable third of lowland flocks was £18.34, while the net margin in average flocks was -£12.65, with a similar story in LFA flocks, EBLEX figures revealed.

“Profitability is out there if you are keeping your production costs down,” he said.

“There is not an expectation that we will return to the record price of 2011. I don’t think we can rely on the market to make sure that producers earn effectively.

“Profitability is out there if you are keeping your production costs down.”
Paul Heyhoe, EBLEX senior analyst

“The low cost producers will still be there when we have tough years.”

The EU sheep flock has lost 7.5m ewes since the decoupling of support payments from production and the European Commission has forecast production to continue to shrink over the next decade.

New Zealand’s supply to the global market is also at a historical low and is forecast to drop again in 2014.

The biggest change is the destination of those exports, driven by China’s sheep meat imports jumping from 50,000t in 2010 to 254,000t in 2013.

New Zealand sent about 8% of its sheepmeat exports to China in 2010 but in 2013 sent about 36%, slightly more than it sends to the EU.

Margin comparison