Farmgate prices 'strong' despite Brexit border concerns

Farmgate prices - so far - are remaining strong, Quality Meat Scotland says
Farmgate prices - so far - are remaining strong, Quality Meat Scotland says

Farmgate prices remain strong despite ongoing Brexit-related border concerns, according to new analysis by Quality Meat Scotland (QMS).

Although cattle prices dipped after the peak Christmas period, they have started 2021 9% higher than last year, with prices at their highest level for this time of year since 2014.

Sheep prices, which started to strengthen in December, have continued to climb through into January, with prices for prime sheep more than 25% higher than a year ago and also higher than the start of the lamb crop marketing year in May 2020.

Stuart Ashworth, QMS Director of Economic Services, said this was an 'unprecedented position' for the sheep market.

He added, however, that prime sheep throughputs in action marts had failed to reach last year’s heights this early in 2021.

“Cattle price reporting from abattoirs similarly show a sizeable reduction in kills during the first full trading week of 2021, although Covid-related staff shortages may have contributed to abattoir and cutting plant capacity,” he said

Prime lamb prices are firm among the major sheep producing countries of Europe suggesting continued consumer demand across Europe, as well as the UK.

“For example, Irish prices are around 20% higher than this time last year, while French producers started the year with prices 9% higher than a year ago," Mr Ashworth said.

Across the EU, the average producer price for prime lambs is around 10 percent higher than last year.

Quarterly UK, Irish and French slaughter volumes have also been lower than a year ago.

"Consequently, despite the disruption caused by Brexit, there has been firm British lamb export demand from France and Ireland to offset their reduced domestic production,” added Mr Ashworth.

Although sheepmeat exports are a significant part of demand from the UK, they are not all of it, with the continuation of firm price suggest that steady domestic demand also exists.

“Although lagging somewhat, data from Kantar Worldpanel to the end of November 2020 indicates a significant increase in household purchases of lamb during the final quarter of 2020 as more in-home cooking was done," he said.

"The latest indication of retail price from the Office of National Statistics suggests the retail price of lamb has increased just over 2% on a year ago, which suggest some tightening of margin in abattoir to consumer links in the supply chain.”

He concluded that, with the revised June 2020 UK agricultural census pointing towards a 1% reduction in the 2020 lamb crop, and slaughter numbers since June being higher than in 2019, the expectation is the reduced carryover of hoggs into 2021.

Slaughter numbers then are likely to remain tight and, with traders becoming more familiar with the demands of exporting to Europe, the outlook for farmgate prime sheep prices is for them to remain firm.