Good prices and rising consumption home and abroad helped sheep producers enter 1997 in a buoyant mood.
And although the feel-good factor is likely to continue, the strength of sterling is a potential cloud on the horizon. The export market – which accounted for 150,000t of sheepmeat last year – will come under pressure as the £ continues to strengthen.
Our reliance on that export market could well see lamb prices fall to about 1995 levels, suggest industry pundits.
At the same time, input prices such as labour, the cost of borrowing money and other fixed costs continue to rise, while sheep annual premium has fallen. Producers can have little influence over these costs – and reducing inputs simply tends to reduce output.
As producers in this Update show, the easiest way to maintain profitability is to increase output. That means aiming for increased lambing percentages, improving management at lambing, and producing exactly what your market wants, whether it is meat or wool.
But meeting the market can prove tricky. The tight specifications demanded by multiples – who now control about half the lamb market – mean it pays to ensure your lambs meet the specified carcass quality, even though it may take more time and effort.
Supermarkets are also keen that suppliers belong to a quality assurance scheme. But estimates put the number of lamb producers in schemes far short of the total eligible.
Ensuring that we hold on to – and increase – our hard-won share of the domestic lamb market, particularly if the export market falls, could depend on supermarket-driven quality assurance.
Little change should be needed to meet scheme requirements. But being in that club could be the key to securing your market
and future profits.