Beef, sheep and pig exports are predicted to rise this year and there will be a small growth in domestic demand for beef and pork.
However, AHDB warned that its outlooks for these sectors all carry a 15% degree of uncertainty because of the UK’s impending exit from the EU.
Stability is forecast, with modest growth to domestic demand alongside a predicted 6.4% increase in exports in 2018.
The outlook for beef in the short term will be greatly influenced by changes in the dairy herd in recent years, particularly during the downturn of 2015-16.
The UK beef sector has seen a rise in the number of native crosses coming forward, likely a product of the dairy herd using more beef semen.
However, this also has a negative impact on carcass weights, which are predicted to fall 1kg a year until 2020.
Falling carcass weights are also a result of processors looking to respond to consumer demands for smaller cuts.
UK beef production is expected to increase marginally in 2018 to 904,000 tonnes, before falling 5,000 tonnes per year until 2020.
Imports and exports were predicted to follow a similar trend of peaking in 2018 before slightly falling away, but AHDB forecasted a 15% level of uncertainty either way, dependent on the trade deal established after the UK leaves the EU.
Irish production is forecast to be higher in 2018 and the levy board predicted the UK would increase its share of the 51% of Irish exports it received in 2017.
Brexit will be the biggest challenge and opportunity in the short term, said AHDB Beef & Lamb senior analyst Duncan Wyatt.
“Brexit could fall out in a way that domestic prices rise, which would be good for UK producers. Similarly, you could paint a picture whereby domestic prices are challenged by cheaper imports that are not facing a particular tariff.
“Brexit presents a crystallisation of a lot of problems that were facing the industry anyway, in as much as there is definitely a need to improve productivity, address costs and a need for farm businesses to look and identify really what their priorities are.”
Mr Wyatt added: “Brexit in that sense presents businesses with an opportunity to look at their business and see if they are doing things as well and efficiently as they can.”
Brexit models: Beef and sheep
Post-Brexit modelling shows that the only scenario that will deliver current returns for both lowland and less-favoured area beef and sheep producers will be an evolution-style deal, with a free-trade arrangement and current levels of support, regulation and labour availability remaining the same.
Models with no deal, less subsidies and higher labour costs saw farm business incomes at a fraction of current levels, and in the case of LFA beef and sheep will become negative.
Rising export volumes will continue to offset the decline in UK lamb consumption in 2018.
Imports are set to fall further this year, because higher returns are enticing Australia and New Zealand to send lamb to China rather than to the UK.
Exports are expected to rise considerably, according to AHDB, to absorb the long-term decline in domestic lamb consumption and predicted increases in production.
However, consumption figures do not measure the food service sector, where lamb is considered a premium product.
The production forecast is caveated with a 5% margin of uncertainty in 2018, which grew to 15% in later years to reflect different post-Brexit trade scenarios.
The UK breeding flock has seen consistent growth over the last five years, with AHDB predicting a modest 1% increase in 2018 as producers hold steady amid Brexit uncertainty.
Last year proved to be a record year for the UK’s lamb rearing rate – levels that are not expected to be repeated in 2018 as a result of wet conditions in autumn 2017, which affected tupping.
Sheepmeat production is anticipated to increase in all quarters of 2018, predicted to rise 6.7% on the previous year to 317,000 tonnes, with carcass weights remaining in line with the long-term average.
The biggest challenge for the sheepmeat industry is the continued decline in domestic lamb consumption, predicted to fall a further 12.4% to 275,000 tonnes by 2020, according to AHDB Beef & Lamb analyst Rebecca Oborne.
However, Ms Oborne added: “The consumers of lamb tend to be from older generations, so equally there is an opportunity to tell the ‘farm-to-fork’ story and the fact that lamb has a lot of positive benefits to it.”
Pig producers will have to compete in a more crowded marketplace as global production rises in 2018.
UK products fared better than the EU as a whole last year, aided by the weak pound and positive reputation of British pigmeat exports, which are forecast to increase 7.2% to 283,000 tonnes in 2018.
Higher production and higher imports could see a glut of pork on the market next year, putting pressure on prices, which would largely be determined by consumer demand levels.
Despite expanding domestic production acting as a deterrent, the UK will have to compete with rising production levels across the continent – crucially in Denmark, where product is generally more price competitive.
The market in 2018 will be further crowded by higher production from the US and Canada. However, demand from China could increase as its domestic infrastructure continues to struggle to meet demand.
Clean pig slaughterings are expected to rise 2% to 10.6 million head in 2018 due to a growing breeding herd, increased herd fertility performance and the higher producer returns of 2017.
However, anecdotally producers were investing more in buildings and infrastructure than significant herd expansion, according to AHDB Beef & Lamb.
AHDB did add the caveat that slaughterings could be lower than forecast because reports of seasonal infertility last year could have an impact on numbers coming forward in April and May time, affecting the second quarter slaughter in 2018.
Production growth is expected to outpace the increase in slaughterings as carcass weights continue to rise – a result of the long-term use of genetics and a drive towards heavier finishing weights.
The pig sector could be at risk of increased imports in 2018.
Exports should also increase moving forward, aided largely by an increased domestic supply of pigmeat.
The biggest opportunity for the pigmeat industry was increasing UK self-sufficiency, which currently stands at 55%, according to AHDB Beef & Lamb analyst Bethan Wilkins.
She added: “Equally, the opportunity is related to the challenge with the carcass balancing problem and we need to stimulate demand for some of the other cuts or find markets for them elsewhere in the world.”
Brexit models: Pigs
AHDB Brexit modelling showed that the pig industry would more than quadruple farm business incomes (FBIs) to average more than £200,000 a year under a no-deal Brexit arrangement with WTO tariffs and reduced support, as long as carcass balancing was achieved.
Other models showed that FBIs would increase marginally under both a free-trade deal and a no deal but no tariffs on exports scenario.