The price of lamb is a growing concern throughout the food supply chain. But is there more to the issue than pitting British lamb against its foreign competitors? Lucia Zitti, NFU Economist, investigates.
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Compared to 2014, UK lamb imports are up by almost 12% and British exports are down by 19%, according to the latest trade data from AHDB for the first three months of 2015.
The main reason behind the increase in UK imports in the lead up to Easter is the availability of more New Zealand lamb. Sheep meat from New Zealand increased by 24% in the first three months of 2015 compared to a year ago.
UK lamb exports are clearly suffering from the exchange rate trend.
However sheep meat imports from Ireland have nearly halved. The reason for this trend is that the relatively strong pound is likely to appeal to New Zealand exporters who ship their produce to the UK where the stronger currency makes their produce more competitive. This promises higher returns for them.
The pound has strengthened by 6.2% against the euro since January this year and 15% since January 2014. UK lamb exports are clearly suffering from the exchange rate trend. Overall UK sheep meat exports to France for the first three months of 2015 have declined by almost nine percent to 9,579 tonne. French sheep meat production is expected to remain stable in 2015 while consumption is likely to contract, partly due to higher prices. The current situation in the French domestic market suggests that sheep meat imports are expected to fall further in 2015.
UK lamb exports will play a crucial role in the domestic market given the forecast of a higher lamb production for 2015. The relatively stronger pound represents a challenge for UK exporters in volume terms and with respect to the impact on the domestic price especially if EU prices don’t register any significant increase.
It is vital that the livestock and food supply chain begin to work together to develop innovation and drive consumption within the lamb sector. This will help us combat currency trends that are beyond our control.