Beef and lamb producers see returns decline in struggling market

A strong pound and increased red meat imports coupled with a plentiful domestic supply and consumer demand hitting a plateau has affected returns for UK farmers during the first quarter of this year.

The UK produced more beef, lamb and pork between January and March compared to the same period last year while exports have fallen and imports increased, according to Hybu Cig Cymru – Meat Promotion Wales.

As a result of these combined factors, producers have seen their returns decline.

Imports of beef and veal into the UK during the first three months of 2015 increased by 10 per cent to 63,900 tonnes compared with the same period the previous year. At the same time UK beef and veal exports fell by 12 per cent to 23,900 tonnes.

“The current trading position for beef has been largely attributed by the strength of sterling compared to the euro,” said Charlotte Morris, HCC’s Industry Information Officer.

“The Russian ban on imports from the EU has also increased the availability of beef on the EU market.”

The UK lamb market has also suffered, with imports of sheep meat for the first three months of 2015 up by 12 per cent on the previous year to 30,200 tonnes.

New Zealand has exported 23,600 tonnes to the UK during the first quarter of 2015, an increase over the previous year of 24 per cent and which accounted for 78 per cent of total imports.

“Reduced demand for sheep meat in China and early marketing due to droughts in the country has resulted in New Zealand supplies of lamb being higher,” said Miss Morris.

“This, coupled with current trading conditions, commercial agreements and the strong pound, has increased the offerings of New Zealand lamb in UK supermarkets.”

As a consequence of the strength of sterling and increased supplies from New Zealand, trading conditions for lamb in the UK have been affected.

Although overall UK sheep meat exports experienced a decline during the first quarter of 2015, several European countries - including Italy and Belgium - received increased shipments of sheep meat from Wales.

“New Zealand supplies of lamb are expected to reduce as seasonal decline in production commences and export availability declines,” said Miss Morris. “Nevertheless, the strength of sterling against the euro could add some pressure to lamb prices, particularly as the lamb crop for this season is predicted to be higher than the previous year.”

During the first quarter of 2015, pork imports increased by three per cent on the previous year at 87,800 tonnes, attributed by higher shipments from Denmark, the Netherlands and Belgium while UK pork exports fell by four per cent to 45,700 tonnes.