Lamb imports from New Zealand are likely to look expensive compared to historical prices, according to one of the UK's top industry analysts.
It's a glimmer of good news for British producers overcoming the effects of the harsh spring weather on this year’s lamb crop.
The June 2018 Agricultural Census published by the Scottish Government showed there were 8% fewer lambs on Scottish farms than at the same point in 2017.
Over the year sheep numbers were down by 272,600 to 3.14 million head. This left the Scottish lamb crop at a five-year low and 3.9% below its 2013-17 average level.
An analysis of the data shows that the national lambing percentage dropped from a 21st century high of 128.3% in 2017 to a five-year low of 122.9% in 2018, which was around two percentage points below both its five and 10-year averages.
However, points out Iain Macdonald, Senior Economic Analyst with Quality Meat Scotland (QMS), the lambing percentage did not fall as far as had been feared.
“Indeed, the challenging winter and spring of 2012/2013 had seen the lambing percentage fall as low as 118.7% in June 2013," he said.
"This year, part of the reason for such a sharp fall in lamb numbers was a significant fall of 4% in ewe numbers on 2017."
The cause of the fall
Given that ewe numbers reported in the December census had been slightly above year-earlier levels, this, unfortunately, points to an increase in ewe mortality.
Elsewhere in the British Isles, sheep numbers are reported using slightly different categories, but it is clear that lamb numbers have also fallen, he explained.
“However, these declines have been to a lesser extent than in Scotland. In England, the lamb crop fell by 1.4%, on a 1.3% higher breeding flock, while the Northern Irish crop contracted by 2% on a 1.1% smaller ewe flock,” he said.
In the Irish Republic, lamb numbers declined by 2.9% on a marginally increased breeding flock.
“Combine the three and you get a reduction of around 2% in lamb numbers on a slightly increased flock, with a three percentage point reduction in lambing percentage,” said Macdonald.
“A smaller lamb crop appears to have had an impact on slaughterings. At the UK-level, Defra statistics point to an 8% year-on-year decline in slaughter numbers in the June to September period, with GB auction volumes down heavily over this period.
The size of this fall suggests that lambs have been taking longer to finish than last year, perhaps signalling that numbers will begin to recover in the final quarter of 2018.
In Scotland, while store sales volumes have fallen in line with the lamb crop, down 8%, provisional figures for slaughterings at Scottish abattoirs show a decline of only 1%, perhaps suggesting that fewer Scottish lambs have been crossing the border this year.
In addition, once higher carcase weights have been factored in, the volume of lamb produced by Scottish abattoirs was only a fraction lower than in the same period of 2017.
Looking at the wider European market, lamb production appears to have risen, placing some downwards pressure on farm-gate prices relative to last year.
After a slow start to the season, processing picked up enough in the Irish Republic in August and September to raise throughput at exporting abattoirs by 3% in the June to September period.
“Meanwhile, Eurostat figures for the June to August period show that slaughterings rose by 7% in France, while processing increased in June and July in Belgium, Germany, Spain, Sweden, Italy and Greece. On the other hand, the Netherlands, Portugal and Romania did report declines,” he said.
In the Southern Hemisphere, while Australian lamb prices have fallen back from record levels over the past month, they remain historically high, trading at an equivalent of around £3.80/kg dwt.
Meanwhile, New Zealand lamb prices have been trading at over £4/kg dwt at the beginning of their 2018/19 lamb crop year.
Beef + Lamb NZ has also forecast a 4% decline in the current New Zealand lamb crop.
“As well as indicating that New Zealand farm-gate prices should hold firm, this suggests that the lamb imported to the UK ahead of Christmas and Easter will continue to look expensive compared to historical averages," MacDonald said.
"In the first quarter of 2018, the average value of imports from NZ had been 21% higher than its five-year average for the period.”