Outlook 2017: Access to EU markets crucial for sheep sector

The UK sheep sector is highly dependent on exports, so the decision to leave the EU is likely to be the most important factor affecting profitability in the year ahead and in the longer term.

The weakness of the pound has helped prices – this autumn the market was about 15% higher than the previous year’s lows, says Andersons director David Siddle.

“With the national flock appearing to have stabilised at about 16 million ewes and production in 2017 likely to remain broadly similar, we are hopeful prices in 2017 will not return to the lows of 2015.”

See also: Why you should use benchmarking data on your farm

Business pointers

  • Maintaining EU markets will be crucial for returns
  • Minimise costs of production – 165p/kg is possible
  • Make best use of grazed grass and modern genetics
  • Adopt stringent culling programme

Maintaining unimpeded access to EU markets will be crucial, says Mr Siddle. “The main factor influencing UK exports further ahead may be the nature of trade deals struck with the EU and the larger exporting nations of Australia and New Zealand.”

Costs of production, unlike trading arrangements, can be directly influenced by sheep farmers, says Mr Siddle. Some farmers can produce 1kg of lamb liveweight for less than 165p. “We’re optimistic that the market will deliver a higher return for significant periods in the years ahead.”

Producers must scrutinise all costs, in particular overheads, the single biggest differentiating factor between the best and worst performers.

“Most discussion in the sector and, disappointingly, much industry analysis focuses on technical performance and gross margins,” he says.

Maximum use of grass

Businesses that can make genuine profits share common themes, says Mr Siddle. “They maximise use of grazed grass and use various degrees of ‘easy care’.”

Outdoor lambing, the use of modern genetics and stringent culling for time-consuming traits such as feet, dags, ease of lambing and worm resistance are common.

So is the principle of taking sheep to feed, rather than feed to the sheep, he adds.

“Many such producers have little need for machinery much in excess of a quad bike, and aim to optimise rather than maximise output from their flocks from a low overhead cost base.”

Farmers Weekly says:

Sarah Alderton, livestock editor

  • More focus on responsible medicine use is a feature of every livestock sector. While the sheep industry is one of the smaller users, action is still being taken to try to make sure its use is responsible.
  • An industry study has found watery mouth, joint ill and enzootic abortion to be three of the main reasons for antibiotics use. Work is now taking place to ensure products are used in the correct way, with advice on preventative measures where possible.

Andersons Outlook

The Farmers Weekly outlook articles are based on Andersons Outlook 2017. Copies of the full publication can be downloaded from the Andersons website by clicking on ‘Publications & Events’. Alternatively, request a printed copy by telephoning 01664 503 200.

Andersons is running a series of seminars in the spring looking at the prospects for UK agriculture in greater detail.

3 March – RAF Club, Piccadilly, London

7 March – Harper Adams University, Newport, Shropshire

8 March – Westmorland, J36 Auction Centre, Kendal

9 March – Carfraemill Lodge Hotel, Lauder, Berwickshire

10 March – York Racecourse, York, North Yorkshire

14 March – Yew Lodge Hotel, Kegworth Leicestershire

15 March – Perth Racecourse, Perth

17 March – Newmarket Racecourse, Newmarket, Suffolk

21 March – East of England Showground, Peterborough, Cambridgeshire

22 March – Salisbury Racecourse, Salisbury, Wiltshire

23 March – Exeter Racecourse, Exeter, Devon

24 March – Royal Agricultural University, Cirencester, Gloucestershire

More information please on the Andersons website

See more