Mixed response to private lamb storage aid scheme
By Robert Harris
NEW private storage aid arrangements designed to cut the number of lambs on the open market and boost prices have met a mixed reaction.
Some farmers leaders welcomed Brussels decision to introduce the scheme, but others believed uptake could be limited. Although up to 600,000 lambs are eligible, light lambs are excluded. Abattoirs are also wary of storing a frozen product that may be hard to sell.
Lamb values have been hit by the export ban and movement restrictions following the foot-and-mouth outbreak, and, at about 165p/kg dw, remain well below year-ago levels. An autumn glut would force prices down further.
PSA will make an "important contribution" to stabilising the market, said NFU deputy president, Tim Bennett. "Britains sheep industry has been hit very hard. We are pleased the EU has offered Britains farmers this desperately needed help."
Jim Walker, NFU Scotland president, said the scheme would come as some relief to farmers desperately trying to market lambs. But retailers and caterers would have to support frozen British lamb.
Under PSA, abattoirs bid to store a minimum of 4t of lamb for three to seven months. But minimum carcass weight is 15kg, which excludes light lambs, where most of the oversupply is perceived to be.
The Farmers Union of Wales is disappointed. "Carcasses weighing 11-15kg should be eligible," said policy director, Arwyn Owen. "It seems very strange to freeze the best lambs, which could be in short supply anyway."
But John Thorley, chief executive of the National Sheep Association, believes PSA will give the sheep industry valuable breathing space. "In a few months, we could be looking at a shortage, given the amount of sheep that have been culled and if NZ lamb goes into Europe rather than here."
Jane Connor, the Meat and Livestock Commissions chief sheep economist, said light lambs were never likely to have been included. "They are not responsible for the whole surplus."
But it is too early to predict uptake and price recovery, she added. The last time PSA ran, in autumn 1999, all 2350t, the equivalent of 140,000 animals, was taken up at a subsidy of k1400/t, then worth about £965.
Llanybyther-based abattoir operator Oriel Jones described the weight limit as "crazy", and said his company would not be tendering. "This scheme would take out lambs that are easiest to sell on the home market." Lambs weighing 11-15kg dw should be stored, with customers agreeing in advance to substitute frozen lamb coming out of store for New Zealand supplies, as in 1998, he added.
ABP abattoir chairman, Richard Cracknell, said he was a "bit underwhelmed". "We are in discussion with our wholesale trade and supermarket customers. There is no point storing something which cant be sold." But he expects ABP to take about 30,000 lambs initially.
Safeways Kevin Hawkins said frozen lamb would have to fight for market share against fresh product, and it would take a "massive effort" to persuade consumers to buy it.
But it may not have to compete against NZ supplies, he added. "The MLC forecasts a glut of all lamb in the first quarter of next year. One has to ask the question whether we need to import NZ lamb at all." *