UK sheep farmers experienced a similarly difficult year to Ireland in 2016, with lamb performance hampered by delayed spring grass growth and subsequent lower daily liveweight gains. This greatly hindered the normal lamb drafting pattern for most farmers and according to the Agriculture and Horticulture Development Board’s (AHDB) senior analyst for beef and sheep Mark Kozlowski, was the main contributing factor to sheep production falling by 11,300t to 286,400t.

Mark presented this data at last week’s AHDB livestock outlook conference, which was changed to a web-based format in 2017. The poor thrive was confirmed by lamb throughput falling by 121,000 head for the first seven months of the 2016/2017 season (June 2016 onwards), while lower weights also reduced throughput.

Furthermore, store lamb sales recorded considerable growth in the period August to November 2016, with some farmers forced into the live trade to maintain drafting rates.

The AHDB reported that total lamb slaughterings in 2016 were down by 4% on 2015 levels to 12.7m head, with the greatest fall coming in the first nine months of 2017.

This is the lowest level since 2013, with Scotland experiencing the greatest reduction with an 11% drop to 1.68m head. England and Wales combined were down 1% to 11.24m lambs, while Northern Ireland slaughterings fell 9% to 0.42m head, but this can be mainly contributed by higher live exports to the south.

The lower production occurred against a backdrop of a previously predicted increase in lamb throughput in 2016 and has led to the AHDB forecasting a large carryover of hoggets into the first half of 2017.

Throughput is forecast to increase by about 175,000 head in the first quarter of 2017, with an increase of about 110,000 lambs also on the cards in quarter two. Ewe and ram throughput is forecast to remain largely steady after 2016’s throughput increased by 4% to 1.68m head.

Imports and exports

Higher availability of sheepmeat in the first half of 2017 and a stronger sterling to euro exchange rate are continuing to make UK imports less competitive than domestic lamb. The total volume of sheepmeat imported into the UK in 2016 was 4% lower than 2015, at 89,500t. The average value of UK imports was also lower and, combined with lower volumes, reduced the total value by 12% to £344.9m.

Mark predicts imports to fall by about 1.5t in both the first and second quarters of 2017. He said that while imports may fall, they will continue due to the UK’s seasonality in production creating a shortfall in the volume of legs available in spring. New Zealand (74%) fulfils most of the import requirement, with Australia (14%) and Ireland the other two main suppliers.

Trading disruption

Disruption to normal trading patterns as a result of Brexit was highlighted as a worry, with the UK also reliant on finding a home for exports, which reduced to shy of 70,000t in the last two years.

France remains the main market, accounting for about 35,000t in 2017, with Germany close to 10,000t and Ireland and Belgium importing about 6,000t and 5,000t respectively.

Mark says that losing access to the EU market would be particularly challenging for the UK, with little scope of finding equivalent volume and high-value markets. The reduction in French sheepmeat consumption and increasing emphasis on supporting domestic produce are worries, not only for the UK but also Ireland.

French consumption of imported lamb has reduced by about 30,000t in the last five years, with consumption of domestically produced sheepmeat largely steady. A higher French lamb crop in 2016 could add to this pressure.

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Potential tariffs in the case of a hard Brexit negotiation of 12.8% or €227/100kg of sheepmeat exported would also surely change the current imports and exports trading environment.

Another factor that is on the sheep sector’s radar is what will happen to the New Zealand tariff-free quota of close to 228,000t in Brexit negotiations. The UK brought a significant percentage of this quota to the EU and it is felt that this could revert to the UK on leaving the EU.

Profitability concerns

As well as the UK sheep sector being most vulnerable to trade barriers, there are fears over any cut in support payments in the wake of Brexit. The AHDB’s head of strategic insight David Swales showed the negative implications of an extreme situation such as the UK removing all industry support.

Seventeen per cent of livestock farms would be unable to survive, 53% would survive but suffer financial distress, 20% would have a positive income but not generate enough profit to invest, leaving only 10% of livestock farms with favourable prospects.

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