7 June 2002

Cost challenge for restructuring

ALTHOUGH prospects for the sheep sector look better for the year ahead, lamb consumption is still falling and technical efficiency must improve to minimise production costs.

Speaking at Scot Sheep 2002, Stuart Elber, agricultural manager with the Bank of Scotland, pointed out that the December 2001 UK census showed the number of sheep put to the tup had fallen by 13%, a reduction of 2.4m.

"There was a reduction of 7% in breeding ewe numbers in 2000, so the 2002 lamb crop is likely to be at least 20% lower than in 2000," said Mr Elber.

Tighter supplies should improve prices and headage payments will be more than double in the next year, he added. "But one note of caution is that lamb consumption continues to decline, with household consumption down 6.4% and catering use down by 16% in 2001.

"This is a challenge that the whole industry needs to address. How do we convince consumers that the quality of lamb justifies a premium over white meat, while producing regular supplies to allow purchasers to optimise returns?"

But on farm producers needed to minimise production costs too. "Technical efficiency is still the key element."

There is a future for sheep, said Mr Elber. But the way ahead will involve restructuring of the industry. "Producers must be both innovative and prudent in seeking means of optimising returns from their farms and must co-operate more fully in supporting the market and supplying it with what it wants." &#42