As Brexit looms with increasing uncertainty as to what shape it will take, the 2017 edition of the Scottish Red Meat Industry Profile gives an insight to the level of exposure to the export market.

The pig meat sector is the simplest from an export perspective – Scotland doesn’t produce enough to meet domestic demand, therefore export markets aren’t so much of an issue. In 2016, QMS estimated that Scotland produced just under a quarter of the national requirement. There are parts of the pig that aren’t consumed in the Scottish market and maximising the value of the pig involves exporting these to mainly third country markets, but the volumes and value are negligible.

Scotch beef, with its PGI status, has a greater export focus, with particular demand in the top-end restaurants across Europe for Scotch beef. However, the main volume markets are the home market in Scotland and then the rest of the UK. In 2016, Scotland was 150% self sufficient in beef production, leaving a substantial volume for sale in the rest of the UK and export markets.

In 2016, Scotland killed 400,000 prime cattle and 71,000 older animals, predominantly cows. Average prime carcase weight dropped a little to a 369kg average from the record high of 371kg average the year before. The Scottish beef industry was estimated by QMS to be worth £643m in 2016, which was down £22m on the previous year. QMS estimates that £154m, a quarter of this value, is obtained from beef sales within Scotland and £420m, over two thirds, is from sales to the rest of the UK. That leaves just £36.5m of sales, 6% from exports. Offal sales from across sectors are more export focused, with 16% of sales revenue coming from exports.

The sheep meat sector is the one most dependent on export sales outside the UK. In 2016, the industry processed just under 1.2m head, producing 172,000 tonnes of sheep meat that was worth an estimated £123.5m. Where the sheep meat sector differs, is where the product is sold. Sales in Scotland account for just 10% of the value at £10m, while sales to the rest of the UK are proportionate to beef sales at 65% of revenue, amounting to £75m. Exports account for the remaining £30.5m of sales, which is 26% of total lamb revenue.

Export destinations

Sheep meat is the most exposed to export markets, but although beef export sales are low as an overall percentage of the industry value, they have an important role in maximising the value of the carcase. Modern beef processing, and to a lesser extent sheep meat, is the reverse of a normal factory assembly line. In a typical factory, various component parts are assembled into a finished product, such as a television or motor car. In meat processing, the factory starts off with a complete animal and breaks that down into its many component parts. Maximising the value of the overall animal depends on each component being sold in its highest value market.

That is why continental markets are so important, not just for sheep meat, but for parts of the carcase that aren’t in demand in the UK, with offals being a particular example.

In terms of destinations, France is by far the most important market, taking 45% of all exports. This is made up of a quarter of all beef and offal exports and three quarters of all sheep meat exports. The next most important destination for Scottish meat exports are the Benelux countries (Belgium, Netherlands and Luxembourg), which take 23% of all meat exports. This is the leading beef market export destination, taking 30% of all meat sales and 19% of sheep meat sales. Italy is the third most import export market taking 11% of all Scottish meat exports, while Nordic countries take 4%. Sales outside the EU represent 5% of exports, with the main destination being Hong Kong and Macau, accounting for 3% of all exports.