Lamb prices under pressure from global imports

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Deadweight lamb prices in the UK have fallen by 120p/kg over the past four weeks to average 525.6p/kg for the week ending August 6.

The increase in import volumes is putting additional pressure on farm gate prices.

According to HMRC data, there has been a 22% increase in the amount of sheepmeat imported into the UK in the first five months of 2022.

See also: Liveweight lamb prices attempt to recover after sharp drop

However, imports remain below pre-pandemic levels.

Farm gate prices in the UK are reportedly under pressure from limited retail demand as well as reduced export demand after the Eid al-Adha festival in July.

Iain Macdonald, head of market intelligence at Quality Meat Scotland (QMS), said an important place to look for potential reasons for the rebound is New Zealand, where lamb production volumes have jumped by 18% year-over-year in the second quarter, after a 19% reduction in the first quarter.

Mr Macdonald said: ‘One of the factors underpinning market prices in recent years has been a reduction in the volume of imports since the middle of the last decade.

As well as increased trade with the UK, the EU imported 18% more lamb from New Zealand than a year earlier in the first five months of 2022, according to QMS.

New Zealand’s biggest export market has traditionally been China, with over 150,000 tonnes of sheep meat exported from New Zealand to China in the year ending September 2021, according to Beef & Lamb New. Zealand. However, due to lower Chinese demand, New Zealand is increasing its exports elsewhere.

Less fresh lamb and more frozen products are exported from New Zealand due to global shipping logistics issues.

“UK import data shows a 50:50 split in the first five months of 2021, changing to an 80:20 split in favor of frozen sheep meat in the same period this year,” said declared Mr. Macdonald.

Quality management system figures suggest deadweight prices in Britain were 20% higher than New Zealand lamb prices in July.

New Zealand Trade Agreement

The UK signed a free trade agreement with New Zealand in February, which allows more duty-free access for lamb.

Modeling recently carried out by the AHDB predicts that a trade deal with New Zealand means that imports to the UK could increase by around 14%, or 5,800 t/year.

However, if New Zealand were to lose China as an export market, import volumes to the UK would have to increase significantly more than that.

Australia

According to QMS, competition from Australian lamb is more limited in the UK and EU markets, due to a smaller duty-free quota. However, import volumes from Australia increased in the first five months of trade.

Mr Macdonald said: “In part this increase likely reflects challenges for Australian exporters in China and the Middle East, but it was also supported by a recovery in production as Australian sheep farmers rebuild their flocks. after the drought of 2018 and 2019.”

QMS suggests that while Australian sheepmeat production is expected to increase in coming years and a trade deal with the UK will improve its market access, Australian exporters will have other outlets to target.

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