The AHDB is forecasting total sheep meat production to ‘rebound’ from last year’s low and exports to increase by 20% year-on-year in its latest Market Outlook for the sector.
Production
The levy board is predicting the UK 2022 lamb crop to reach 17.9 million head after the December 2021 survey revealed a 3% increase in the breeding flock. Defra’s slaughter statistics report 5.6 million lambs have been marketed in the first six months of 2022; 8% more than in 2021. A further 7.3 million are forecast to be slaughtered in the second half of 2022. Ewe kill for the first six months of the year has totaled 580,000 head; up by 60,000 on the same period in 2021, although still historically low. The AHDB is forecasting a further 690,000 coming forward in the second half of the year, although this could be higher if culling policies alter due to strong prices and further input cost increases. Looking to 2023 and 2024, supply is forecast to remain relatively flat, increasing by just 1%, with future farm policy likely to be the main driver.
Consumption
Due to lamb being a higher-priced protein it is expected to come under pressure as consumers face significant economic challenges. Retail sales are expected to be significantly less than pre-pandemic. Eating-out volumes are forecast to be higher in 2022 than in 2021, but still remain less than before Covid. Takeaways have done well, particularly lamb kebabs. Although this is likely to ease back in 2022, it is still expected to compensate for eating-out losses. As a result, overall lamb consumption volumes for 2022 are expected to be down -18% and -16% compared with 2021 and 2019 respectively.
Trade
UK exports of sheep meat were by up 22% year-on-year for the first half of 2022, however, 2021 was lower than normal due to disruptions from Brexit and Covid. Exports are expected to remain similar for the remainder of the year due to increased production and good demand from key markets such as the EU, Asia and the US. Imports have also been up compared to year-earlier levels (25%) but in contrast, are expected to be lower during the second half of 2022 as the cost-of-living crisis impacts purchasers’ spending power. Asia remains a key market for New Zealand and Australia due to the cost of freight. The Australia-UK Free Trade deal is due to come into force in the Autumn. AHDB analysis shows this could lead to an increase of lamb into the UK, although from a low base and is more likely to replace volumes from elsewhere rather than any increase in total imports.
Prices
Farmgate prices for clean sheep were below last year’s record levels for the early part of the year, but rose above them in the second quarter and remain significantly above the five year average. Tight supplies in the EU are expected to keep prices strong, but a significant reduction in demand from export and domestic markets could impact farmgate prices.