21 September 2001

Dismal advance ewe premium likely

SHEEP producers are being warned to expect an even lower second advance ewe premium this autumn than the first 30% payment they received in July.

Then they were paid a dismal £2.42/head, based on an EU market price of about 237p/kg dw. This reflected the fact that Continental values were soaring due to the forced absence of British lamb in the wake of foot-and-mouth.

Sheep market managers meet in Brussels today (Friday) to set the second 30% advance. But ahead of the meeting commission experts were warning that EU prices had gone higher still, pointing to an even lower subsidy to producers.

The one consolation is that UK lamb prices have not yet slumped as industry pundits were predicting in the early summer. Since the Meat and Livestock Commission started regular price reporting in mid-August, values have held steady at about 165p/kg dw.

In part they have been helped by the welfare disposal scheme and its extension to include light lambs earlier this month. But there were signs this week that prices could now be sliding, with trade sources pointing to a 5p/kg drop on Wednesday (Sept 19).

Hopes that private storage aid would lend support to the market have also faded. farmers weekly understands that just 1535t have been tendered this week at quotes of between k1072/t (£665/t) to k2611/t (£1620/t).

That is very similar to the first round of PSA in late August, when all bids were rejected. The expectation is that the commission will reach a similar verdict in Brussels today (Friday).

But even if it accepted some of the tenders to put lamb in store for seven months, the volumes are so low it would not help the market.