Stronger euro boosts British meat exports

The weakness of sterling has led to a dramatic resurgence in UK meat exports, according to the latest market analysis from EBLEX.

Over the past year sterling has fallen to an historic low against the euro, dramatically boosting the competitiveness of UK meat in its main European export markets. Supported by EBLEX export market activity, this has stimulated a surge in both the volume and value of UK exports (see table).

“Coupled with declining national supplies and a high level of domestic consumption, the extra export demand has pushed prime beef and lamb prices up by more than 25% and cull cow prices by over 50% in a single year,” says EBLEX economics manager Mark Topliff.

“This has created the most favourable market conditions for grazing livestock production in almost two decades, moving farmgate prices closer to the levels required for sustainable production.”

With the recession predicted to affect the UK and key EU economies to a very similar extent, sterling is expected to stabilise around €1.05-1.10 and show little recovery over the coming year.

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Key UK Beef and Sheep Market Indicators

 

2007

2008

Change

Average prime cattle price (p/kg DW)

205.4

259.6

+26%

Average cull cow price (p/kg LW)

54.7

84.5

+54%

Average lamb price (p/kg DW)

235.8

296.8

+26%

Beef and sheep meat exports (tonnes)

131,700

173,600

+32%

Beef and sheep meat exports (£ million)

318.7

488.9

+ 53%

Against this background, UK beef and sheep markets are forecast to stay strong – providing the steep rise in retail meat prices neither undermines domestic consumption nor sucks in more competitive imports from abroad.

“Beef and sheep producers need to appreciate their critical dependence on export markets and consequent vulnerability to currency movements that have nothing to do with the essential economics of livestock production,” says Mr Topliff.

“Under these circumstances, while taking the advantage of current opportunities by producing sufficient stock of the right export quality, they are strongly advised to maintain tight cost control in everything they do.

“This will be essential both to protect businesses from the effects of short-term exchange rate fluctuations and to ensure their production systems are as sustainable as they can be for a longer term in which trading conditions may not be as favourable as they are today.”