By Rhys Davies , chief executive at Farmers Marts (R G Jones), Dolgellau, Gwynedd
We are now seeing an increasing numbers of lambs coming forward every week through our three marts. We have already seen more buyers attending our marts this year, and with numbers of lambs increasing more buyers have registered an interest.
There remains a strong home market for finished lambs, grazing ewes and store lambs. Aside from the home market, the challenge this year will be for the export processors to maintain a steady and increasing flow of lighter lambs to the continental markets as the season progresses. A stronger sterling has brought back prices and the ongoing uncertainty with Greece, with some cracks also appearing between Eurozone partners seeming to support a strong sterling.
We should expect the support of our main retailers and foodservice providers when there is a plentiful supply of fresh home produce available. There must be a decent retail margin this year. With lamb prices down from 12months ago, we are all expecting more shelf space to be allocated now to promoting lamb sales.
It does appear at a time when pressure is applied on world commodity prices, the larger retail buyers in the home market are ever more moving towards pricing closer to the world spot market. The opposite of what we would wish to see in a depressed market.
This is evidenced in the dairy sector, and parallels can be seen this year, especially in the prime lamb sector. When the supply of lamb to demand is tight, retailers and processors seem keen on offering contracts and are encouraging ‘forward integration’ along the food chain.
Producer groups, local and regional initiatives all seek to extract a small premium for producer loyalty. Most food chain consultants would advise producers to work ever closer with the retailers and processors. In a world where supply and demand are steady, there is no doubt that benefits exist in ensuring that messages on customer requirements and changing patterns can easily move back and forth along the food chain quickly. Livestock markets play a key role in the chain.
Following a good lamb crop in 2014, our producers again seem happy with the number of lambs being reared. However, many producers have received letters confirming that their dedicated buyers, will not be 100% dedicated this year. Some of the lambs will need to be sold to elsewhere, or a processor will take the lambs, but the loyalty premium will not be paid.
Rest assured, in these tough times we will continue to be 100% dedicated to our producers no matter what the market situation.