Lamb price hopes ride on market support measures

28 September 2001

Lamb price hopes ride on market support measures

By James Garner

LAMB prices came under pressure this week, renewing fears that the market is about to spiral into decline. But analysts say there are too many unknowns to judge which way prices will go.

Various market support measures have so far given few clues. Last week, the private storage aid scheme was deemed unattractive by processors and the lamb buy-up scheme, introduced by junior DEFRA minister Lord Whitty in August, has only just started to gain momentum.

Only seven tenders out of 71 were accepted for PSA at quotes of below k1190/t (£744/t). This means just 140t will go into freezers for seven months.

"That will make no difference at all to the market," said the Meat and Livestock Commissions Brussels manager Peter Hardwick.

The UK market now faces a crucial period where the balance between supply and demand will begin to unravel.

With PSA discounted as a market support mechanism, focus is on the one-off lamb buy-up scheme and successful retail promotions to remove light lambs. The F&M cull and the uncertainty over how many ewe lambs will be retained for breeding confuse the picture, say analysts.

Jane Connor, head sheep economist at MLC, reckoned it was still too early to judge the success of DEFRAs light lamb scheme.

"If market prices are comparable and obtaining movement licences remains onerous, the buy-up scheme could be popular."

But at just £10/head for lambs weighing up to 30kg on the hoof it has so far attracted only 100,000 lambs, with a further 38,000 pledged for slaughter in the next fortnight. It has only been open since Sept 3 so numbers are just beginning to build.

Following DEFRAs recent announcement on autumn sheep movements, the trade has reacted sharply and more lambs are coming on to the open market. DEFRAs latest statistics show lamb slaughterings are at their highest since F&M begun.

But the recent influx has wiped between 10p and 20p/kg off prices for standard lambs in the last two weeks. They had held steady at 160p/kg dw for most of the summer.

Light lambs have also been hit. Until recently they were trading at 130p/kg; now they are levelling at 115p/kg in most northern abattoirs, while traders say some Swaledale wether lambs have realised just £8-9/head.

Kevin Pearce, the NFUs head of livestock, said there were still many lambs to come off the hill.

Terry Bayliss, head of Farmers First, disagreed with the gloomy forecast: "Come February or March next year we will be short of lambs."

He is optimistic about the prospect of regaining lost export markets six months after the UK confirms its last case of F&M. "As soon as the export ban is lifted, our French buyer would take up to 18,000 carcasses and our Italian contact 10,000." &#42

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