National Sheep Association
WITH the breeding sales almost upon us, I face commenting on future trade with some trepidation. We are still suffering from the hiatus set in train by the 1996 BSE fiasco, but the future is looking clearer.
There are probably more positives now than a year ago. Currency differentials which impinge on trade are moving in the right direction, with sterling slightly weaker and the k appearing to be gaining some strength. If this continues it will have a positive influence on the market by autumn when most lambs will be coming off.
Currency value has a vitally important part to play in our pricing structure. New Zealand has played a significant part in the success or failure of UK sheep farming for over a century. With a low valued NZ$ and a high valued sterling, the Kiwis can put product on to the UK and European market at prices that are beneficial to them, but damaging for us.
In the past few months, when our prices dropped lower than expected, a significant quantity of NZ lamb destined for France actually appeared here. An apparently high additional quantity of lamb on a more or less constant market dep-ressed prices – the supply-demand equation will never really be bucked. Equally, the respective values of sterling and the k have a dramatic influence on our ability to export.
Bearing in mind the NZ influence, much greater effort needs to be re-established to work with them to ensure supplies do not hit our markets at our peak production times; it is disastrous for all sheep producers wherever they are.
So where are we now? Kiwi lamb has been consumed, UK lamb is coming on stream in increasing quantities – there are even some signs that prices are hardening, possibly the result of a difficult season with too much wet and not enough sun. Even so, there are some really first rate lambs about – the carcasses hung at the Royal were the best for years.
I get the impression that in some high hill areas tupping time took place in weather conditions that were far from ideal – subsequent lambings reflected this and the cold, wet lambing season brought its own problems. The result is that some people have lower numbers to come off which could have a positive bearing on price.
The reduction which has taken place in lowland lamb production will also help. One ram breeder was concerned that about 18,000 ewes had been put off in a relatively confined area which he supplies. But not all of these will have gone to the kill and many we know will have gone to enable new flocks to be started at a fairly low investment.
Industry trends will reflect slightly lower numbers of lambs and provided this does not go so far that we start to lose critical mass then the industry is likely to benefit in the next few months.
The other potential area for improvement will come from the targeted approach of Farmers First to seek out new markets for carcass lamb as well as maintaining the live export via Farmers Ferry. But it is essential that Farmers First doesnt just compete for the existing customers of other UK-based meat firms which have provided the traditional link with our Euro partners.
Into the entire pattern we have to consider that a not insubstantial number of the hill and upland flock has been taken off to allow perceived benefits to be gained from conservation payments. We are also looking at renewed efforts to improve quality of hill and upland flocks at the expense of quantity.
The message, therefore, becomes relatively clearer. The national flock will stabilise at perhaps 1 or 2% points down. There will be greater concentration on the provision of a quality article. People selling the quality of breeding ewes and rams are likely to find ready custom.
All of this will depend on the fact that supermarket buyers, as major influencers of the market, will need to pay prices which allow farmers to at least cover their production costs. These vary but there is a reasonable consensus that a viable sheep business needs a rock bottom price of at least £1/live kg to get near break-even. Screwing prices under this level is bad business, will result in a wrong attitude from producers, a poorer quality article for the future and no confidence to invest. *
Sheep numbers will fall, helping prices, but we need to concentrate on exports, says John Thorley.