WHATS THE BEST WAY TO MARKET?
How should you market sheep during the current
crisis? Independent livestock consultant
Peter Crichton offers some advice
ALL UK sheep producers are facing a grim future in the run up to the millennium, with an across-the-board price collapse that has hit all sectors.
With finished lamb returns on the floor and late August SQQ hovering around 75p/kg liveweight, even the best 40kg medium lambs are struggling to hit £30 a head. This compares with producer prices a year ago of 105p/kg, equivalent to £36 a lamb, a 20% drop that leaves most producers selling at well below production costs.
In late lambing and LFA areas the picture is even worse because producers in these regions have missed the boat for finished lamb prices. These have slumped by 50p a kg since Easter and returns from store lamb sales are now at record lows.
According to the latest store sale reports, most mid-sized 20-25kg store lambs are trading at £13-£16, which is over 40% down on last years levels. Stronger lowland types are selling in the £18-£24 range, but buyers are sitting on the sidelines until there are clear signs of how the finished lamb market is going to pan out in autumn.
Also on the rack are many northern and western flockmasters who rely on seasonal ewe lamb sales for their main source of income. Although the big North Country Mule and Scotch Half Bred auctions have yet to get underway, early indications are that bids are likely to be on the floor.
This is due to a combination of low prices throughout the sheep sector and the collapse in cull ewe values. With auctioneers reporting smaller hill type cull ewes often unsaleable – being sold by the pen for a few £s each – there is little incentive for breeding buyers to take the plunge, except purchasing flock replacement at bargain basement levels.
However, rather than stage an inquest into the current situation, flockmasters need to look at options in the months ahead and plan a way through this crisis, to ensure their business survives into the next century.
Because of the dominant hold major UK supermarkets now have over the meat industry, progressive producers should look at their requirements and provide what the market wants.
With lean meat at a premium and many major abattoirs prepared to pay a bonus for lambs in the E & U, 1 to 3L conformation and fat class categories, performance recorded rams are essential. Gone are the days when producers brought nice looking rams. Now more attention should be paid to EBVs, such as terminal sire lean and growth indices, and trait heritability.
At the same time producers who would normally sell in the store ring should look at options for on-farm finishing. This is exactly what store lamb buyers will be doing, after the haulier and auctioneer have taken a chunk out of a shrinking margin.
Despite many upland producers arguing that they have no keep, or are unprepared to buy bagged feed to get lambs to the slaughter stage, low-cost alternatives are available.
A well balanced mix of an economic intermediate ration and a high-energy finisher feed are worth looking at. A low-energy indoor holding diet based on silage and a trough-fed 17-19% protein compound should keep most lambs in good condition. Once the market shows signs of picking up the ration can be stepped up to a 3:1 wheat/soya finisher, offered ad-lib.
Another source of cheap feed in arable areas is stubble turnips, beet tops, rape and cereal aftermaths. Now that the agricultural recession has hit the crop sector, there are new opportunities for upland flockmasters to approach hard-pressed arable farmers and see how sheep can be integrated, on a seasonal basis, into rotational cropping programmes.
Producers who decide to finish lambs rather than sell stores need to focus on how, when and where they intend to sell.
A look at finished sheep prices last year saw prices slide from 75p/kg to 65p/kg between September and December. If similar trends occur this year, finished prices in the autumn are likely to fall to £30-£24 apiece.
Farm assurance schemes have provided sheep producers with the chance to lift returns above the market average. With most major meat buyers switching to farm assured stock, membership of assurance schemes is essential for all breeders and finishers. The ABM stamp sets the seal of approval on the product and farm assurance costs will soon be repaid by higher returns.
Although organic conversion may not be an option for many producers, it is worth looking out for some. Organic meat is the one product that most major UK retailers are still short of, and those producers tempted by this scheme should approach the Soil Association to examine its potential. Prices of up to 300p/kg deadweight are available, which is double the commercial rate.
On-farm freezer sales of whole or half-boxed lambs have provided a lifeline for many Welsh and west country sheep producers. Providing that there are local slaughter outlets who can deal with killing and packing, there is no reason why producers should not look at setting up their own direct sales or mail order operations for lamb, with their unique own farm label. *