Lamb forward contracts meet a mixed reception

4 December 1998

Lamb forward contracts meet a mixed reception

By James Garner

OFFERS of forward contracts for lamb producers in Wales from Marks and Spencer received a mixed reception from industry experts and producers at Smithfield.

M&S beef and sheep specialist Chris Brown said the company is supplying a demand from the sheep industry. The scheme, operated on a trial basis this year, will offer 20-30 producers from Wales a fixed contract from January to March on lambs between 16-20kg U,R 2-3L. Prices will rise incrementally from £1.80/kg deadweight to £2.30/kg dw for the last week in March.

"The scheme is not a knock on auction markets; its offering producers alternative ways of marketing lamb and is in partnership with Anglesey abattoir Cig Moir."

NSA chief executive John Thorley said the scheme could help introduce market stability in the short term but not long term. "We worry about diminishing the role of auction markets. Too many lambs are going deadweight," he said. "At the moment, any producer who gets a price that allows them a profit will jump at it."

St Merryn Meats producer club manager John Dracup said that it would investigate this option if producers wanted it. But past experience was not promising. "Although forward contracts have seemed reasonable at first, when prices improve producers have withdrawn supply," he said.

Kepak Preston general manager Marcus OSullivan said some large-scale lamb producers want forward contracts. "For large store finishers, it might provide a more stable income instead of profits one year followed by losses the next."

But Mr OSullivan shared some producers concerns about increasing the power of supermarkets. One of the most outspoken showgoers was Malcolm Stewart, Brotherstone, Melrose, who runs 1100 Mashams and Lleyns, selling all lambs deadweight at 20kg.

"I am dismayed that producers are dealing with multinational corporations that dont care about farmers. There will be only one benefactor – M&S shareholders. But we cant blame it all on the supermarkets. We should have got together to form a large farmer funded co-operative to have more power in the market," he said.

Also worried was James Kendall, Woodyard Reeth Farm, Richmond, North Yorks. He runs 430 Swaledales lambing in April, breeding Mules and selling wether lambs and Mule ewe lambs.

"Ive always been a big supporter of auction markets and its worrying that supermarkets could dictate trade through these types of contracts."

But the prospect of a secure price attracted some. Among them was Jim Cory, Beckaveans Farm, Jacobstone, Bude, Cornwall, who runs 550 March lambing Mules and sells Suffolk cross store lambs for finishing.

"Anything that gives producers a secure price is a good thing. However, it is dodgy ground as supermarkets want choice lambs. What happens to the rest, including cull ewes if auction markets are lost?"

Potential for forward marketing was welcomed by John Campbell, Thrunton Farm, Alnwick, Northumberland, who farms 1100 Scotch half bred and Blackface ewes.

"Supermarkets are starting to rule the roost but we should be open-minded about forward marketing," said Mr Cambell. "We have to look at every marketing option and be flexible."

in the way we sell."


&#8226 Supermarket domination?

&#8226 Secure price attraction

&#8226 More marketing flexibility

&#8226 Auction market future?

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