The latest sheep market dashboard report published by Bord Bia shows Australian lamb prices for the week ending 15 July 2023 falling to just €3.31/kg. This represents a drop of €2/kg compared to the corresponding week in 2022.

As can be seen in Table 1, the differential in Australian lamb prices and prices in Europe now stands at between €3.50/kg and €4.00/kg.

The doubling of the differential has made the European market a much more attractive destination for exports.

The main market targeted is the UK market, with the volume of sheepmeat imported so far in 2023 running at over 11,000t up to mid-July, compared with approximately 9,000t for the full year in 2022.

Free trade fears

There are growing fears that increased exports of Australian lamb to the UK following the commencement of the Australia and UK free trade agreement will undercut the value of lamb produced in Europe.

Table 2 details the volumes concerned in the free trade agreement.

The volume listed for 2023 is 25,000t for a full calendar year, but since the trade deal only came into play on 31 May 2023, a pro rata reduction has been applied.

Lower price point

While the volumes of Australian sheepmeat in the UK market at present are not major, the availability of cheaper-priced sheepmeat puts pressure on domestic produce and imports from other destinations.

For example, a number of Irish processors say they are being quoted Australian sheepmeat prices when trying to complete deals with UK buyers.

There are real fears that given the large differential that once Australia makes inroads in marketing its produce, it could pave the way for volumes to quickly increase.

Cheap food policy

The British market is no stranger to lower-priced markets, with the country traditionally favouring a cheap food policy.

In the early 2000s, when New Zealand was filling 100% of its EU tariff-free quota, it was not uncommon for the UK to import over 100,000t of cheaper product and, in turn, export in excess of 100,000t of higher-value cuts.

The UK has witnessed a significant increase in import volumes in 2023 and also recorded a similar increase of product on to the EU market.