Changing markets and policy shifts challenge sheep sector

The global market for sheepmeat will continue to grow while the domestic market is contracting, so producers need to be ready to adapt and compete in this changing landscape.

This is according to the AHDB’s latest Horizon report, Opportunities in the sheep sector, which sets out the long-term outlook for English sheep producers.

It looks in detail at three key areas: trade, the shift in English agricultural policy and consumer attitudes and behaviours at home and abroad.


Ninety percent of UK sheepmeat exports go to the EU, and while post-Brexit market access has been agreed, the way this operates puts the non-tariff costs of such trade up to between 1% and 8% of the carcass value, compared with 0.4% before Brexit.

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The report highlights that the need to now add a GB label to exports may negatively affect demand for UK sheepmeat in France. It also suggests that shifting exports to France from carcasses to cuts should be considered.

Global lamb consumption is forecast to grow by 1.7-1.9% a year over the next 10 years, with the highest potential in countries where the number of middle-class consumers is expected to grow by 40% to 5.4bn. That growth will be concentrated in the Asia-Pacific region.

The world’s largest sheepmeat importers are China, the US and France. Scrapie concerns mean the UK does not currently have access to China and the US for sheepmeat, and the AHDB wants to see the government prioritise such access. New Zealand and Australia have scrapie-free status and so have market access.

As well as being the world’s largest importer, China is the biggest producer and consumer of lamb, and consumption there is due to rise 28% by 2027.

The report highlights the seasonality of UK lamb production as an issue for examination, with carcass balance needing to be addressed. It sets out how New Zealand has adapted since the UK joined the EU, initially shipping only frozen carcasses, then chilled carcasses and now chilled cuts, targeting markets where the most added value could be gained by supplying specific cuts to local demand.

Agricultural support policy changes

The removal of the Basic Payment Scheme (BPS) by 2028 will challenge the sector, and it’s unlikely that most farmers will be able to make up the loss of BPS entirely with environmental payments, says the report.

Cost of production and business efficiency need to be the focus for producers, it says, with controlling overheads and machinery receiving the initial scrutiny.

The UK produces upland and lowland sheepmeat more cheaply than France and Spain, while hill production is more costly. However, Australia and New Zealand produce sheepmeat at about half the cost of the UK, so there could be some lessons from their approach, the AHDB says.

New Zealand and Australia have lower costs due to more ewes being managed for each labour unit and lower costs for machinery and buildings. Systems are typically extensive, using rotational paddock grazing.

Consumer demand

Domestic market challenges include lamb sales being mainly to older, richer customers, the relatively high price of lamb against other meats and the perception that it is less versatile and sometimes too fatty – only 57% of GB sheepmeat makes R3L or a better target grade.

Lamb needs to justify its price point by clearly communicating its taste and quality attributes to consumers, says the report.

The importance of the halal market could be developed to producers’ benefit, it suggests. Sixty percent of halal consumers eat lamb at least once a week compared with just 6% in the wider population.

UK sheepmeat

  • 33.5 million sheep on 78,000 holdings
  • Average number of sheep on each holding is 430
  • 10,400 holdings have fewer than 20 sheep
  • 9,400 holdings have more than 1,000 head
  • One-third of UK lamb production is exported to the EU, accounting for 90% of lamb exports
  • People eat 80% less lamb in the home than they did in 1980
  • A typical lowland grazing livestock farm receives £15,800 in BPS, which represents 168% of farm business income (FBI), essentially profit, with typical environmental payments of £3,900, in addition to BPS
  • A typical less-favoured area grazing livestock farm gets £25,500 in BPS, representing 112% of FBI – and has environmental payments of about £11,300

Source: AHDB Opportunities in the sheep sector report