Lamb faces an uncertain future

While the media buzzwords for the lambing industry in 2007 were foot-and-mouth and bluetongue, this year the phrase on everyone’s lips is ‘credit crunch’. In simple terms, an uncertain economy leads to uncertain consumers, which in turn leads to less money spent on people’s shopping baskets. So people will be buying less expensive foodstuffs, such as meat. While this does not bode well for lamb producers, 2008 has been much more rosy than the heavily disease-dominated 2007. Lamb producers are not the only ones to have suffered and 2008 has seen a number of initiatives, launched by industry bodies, to help producers cope with the troubled times of last year and the uncertain times ahead.

There were reasons to be cheerful in the first quarter of 2008, but, at the time of writing, the outlook seems a bit more gloomy. According to statistics from the Agricultural and Horticultural Development Board’s (AHDB) Meat Services Economics Department, on behalf of EBLEX, new-season lamb prices in England stood at 185.03p/kg liveweight in the week ending 29 March, 50% higher than the same week in 2007. By the end of May, this averaged at 176p/kg lw, despite a peak of 191.31p/kg lw, but prices fell from there. In the week ended 21 June, the average price was 161p/kg lw, a fall of 10p on the previous week. Since the end of May, the GB deadweight SQQ price has fallen on a weekly basis to average 360p/kg dw (week ended 21 June).

Consumption also seems to have taken a hit this year. Household purchases of fresh and frozen lamb were 9% lower in the four-week period ending 18 May, compared with the same period last year. The number of actual households that bought lamb fell by 3% and those who did buy lamb did so less and bought less on each shopping trip.

Where does it come from?

More than ever before, consumers are demanding to know where their lamb comes from. This is due to a number of factors, from the green agenda getting much more publicity to campaigning television chefs. The industry is fully aware of this and is taking action to address the situation.

“Provenance is increasingly important to consumers; more than ever, they want to feel confident about where their food comes from and how it has been produced,” says Hybu Cig Cymru - Meat Promotion Wales (HCC) marketing manager Bill Joyce.

In 2003, Welsh Lamb was awarded the sought-after European Commission Protected Geographical Indication (PGI) status and HCC says this has helped farmers. “The coveted PGI status, which has been awarded to Welsh Lamb, provides retailers and consumers alike with a guarantee about the quality, traceability and origins of the product.” Wales is an ideal place to start on this year’s lamb focus. Household expenditure on lamb in Wales reached £46.4m in the year to April 2008, fractionally up from the previous comparable year. In the marketplace, the number of new-season lambs going through Welsh auction markets decreased in April, but the average price was 191.24p/kg lw, a rise of 44p on the year. Standard new-season lambs fetched an average 41p/kg more than a year ago at 192.47p/kg, while medium-weight lambs fetched 50p/kg more. Joyce says there is definitely much more hope for 2008, which is a great contrast to the previous season. “2007 was a terrible year for the Welsh lamb industry, so 2008 had to be an improvement,” he says. “So far, this year has seen a significant recovery in lamb prices, which Welsh farmers have desperately needed. Uptake of Welsh Lamb by retailers has also been good and, helped by a weaker pound, exports have recovered. “Undoubtedly, higher input costs, especially for diesel and fertiliser, have put the greatest pressure on Welsh producers this year. Then there is the unknown of the severity and length of the economic downturn.”

Despite this, Joyce says that if the lamb producers and relevant bodies such as HCC pull together, they can make the best of the opportunities that arise in the coming years. “The economic downturn in the UK and on the Continent will present some challenges to those marketing Welsh Lamb. Increasingly, many consumers will be driven by value in selecting meat, but a significant part of the buying public will continue to seek meat with provenance and taste. However, I expect there to be shifts in the lamb category, with more consumers looking for items such as lamb mince, rather than more traditional cuts. “Looking some years ahead, many sheep flocks in traditional lamb-producing countries are declining and this reduced production will offer opportunities for Welsh Lamb, providing we maintain demand through appropriate promotion programmes.”

In terms of marketing, at the end of June, HCC launched a UK cinema campaign to promote Welsh Lamb, coinciding with the Dylan Thomas biopic ‘The Edge of Love’. And in April, HCC took part in the Food and Hotel Asia exhibition in Singapore, with the aim of getting more Welsh Lamb in shops and restaurants in Hong Kong, Singapore and the United Arab Emirates.

In September, HCC will launch a television advertising campaign, entitled ‘Wet Your Appetite’, narrated by Welsh actor Matthew Rhys, star of The Edge of Love, in targeted regions and on UKTV Food channels. And it plans a promotional drive in publications such as The Guardian Weekend and Delicious magazine.

Scottish growth

For Wales’ Celtic brothers in Scotland and the Republic of Ireland, 2007 proved just as tough for lamb producers, but there was some evidence of recovery. According to Quality Meat Scotland (QMS), lamb accounts for 13% of meat sales in the country, with growth of £4.1m in the 52 weeks ending 27 January 2008. In August, average lamb prices saw a rise of £3.18 to £32.24 at the Quoybrae Mart in Caithness and, at the Dingwall Auction Mart, prices rose £4.74 to £32.44 for the 8,578 lambs sold on one day.

“Up to the middle of July this year, everyone will be relatively satisfied,” says Rod McKenzie, development manager for the Scottish Sheep Strategy (SSS), a sponsored initiative by QMS to record performance, available to all sheep producers in Scotland. “The greatest pressure on lamb producers is the shortage of labour. Neither fuel nor feed costs have yet impacted on the sector.”

McKenzie adds: “The future is brighter for those who remain in the sector. A lot of people are still looking at their sheep enterprises.”

In July, QMS launched Estimated Breeding Value (EBV) workshops to aid Scottish sheep farmers in making better purchasing decisions. “EBVs for sheep have been around for a number of years, but finally, sheep producers are beginning to make the link between attending these on-farm events and achieving better returns from their flock’s performance,” says McKenzie.

Extra exports to Ireland

Predictions in the Republic of Ireland for 2008 show that Irish sheep supplies were expected to decline by up to 4%. The Meat & Livestock Review 2007/2008 also forecasts a decline in the export availability of sheepmeat in line with supplies to 46,500 tonnes. Productions levels in the Republic did decline by July, but this led to an increase in demand for UK lamb in both carcase and cut form, resulting in Ireland overtaking Belgium as the second most important market for UK exports inside the EU. According to Global Trade Information Services, UK exports of sheepmeat to Ireland reached 3,100t from January to May 2008, compared with only 1,600t in the same 2007 period.

“Irish lamb traditionally comes on to the market earlier in the season than domestic lamb and, in recent years, the British market has become increasingly important for Irish lamb exports, accounting for over 15,000t or 29% of their total export volumes for 2007,” says Henry Horkan, Bord Bia’s trade marketing specialist in meat. “There has been a significant shift away from the mutton trade, which last year made up a fifth of Irish sheepmeat exports to the UK, to higher-value lamb markets, such as pre-portioned foodservice cuts.” QMS was not the only body in the UK to launch initiatives aimed at helping sheep breeders this year, with EBLEX also getting in on the action. In July, the organisation launched an interactive CD for farmers to highlight information on lameness prevention and treatment for affected sheep. EBLEX regional project coordinator Katie Brian says: “We aim to make the delivery of the messages as practical and relevant as possible, and this CD supports our efforts in a very visual and interactive way.”

EBLEX also launched a technical guide to help sheep breeders cost their enterprises more accurately in its manual ‘Improved Costings for Better Returns’. Part of the Sheep and Beef Better Returns Programme, the manual helps to explain how to capture and process raw physical and financial data and gives a series of costing tools to help producers compare their figures with others. “With rapidly rising input prices, it is even more important to know exactly how much it costs to produce each animal – taking into account both variable, fixed and associated costs, such as vehicle road tax and mobile phone calls,” says EBLEX economist Mark Topliff.

EBLEX is also pushing the marketing button this August with its ‘Tuck-In’ kits, available to all butchers, which include a new display poster for the autumn season and an array of lamb recipe leaflets to give away to customers. Mike Whittemore, EBLEX retail project manager, says: “‘Tuck-In’ is a tried-and-tested means of tempting customers to try new cuts, helping butchers to drive sales and maximise profit potential.”

Enjoy england

Autumn also sees the launch of a new competition in conjunction with EBLEX, Enjoy England and Farm Stay UK, where a family of four can win a three-week holiday on an English farm. The competition will be promoted via on-pack stickers on purchased lamb products and through leaflets at serve-over counters in butchers’ shops.

Press adverts in women’s magazines and food titles will also continue as well as promotional material, fronted by Quality Standard lamb ambassador and ‘Urban Chef’ Oliver Rowe.

Meanwhile, the ‘Beefy & Lamby’ campaign is still standing strong in the crease this year, promoting lamb to the wider market, despite rumours that the website was to be axed in a money-saving cull.

A recently launched recipe club encourages web users of www.beefyandlamby.co.uk to sign up for free to the exclusive club, which offers a range of recipe ideas and an opportunity to share cooking tips with other members.

EBLEX also says that, in the coming months, it will try to increase awareness of the Quality Standard scheme in the foodservice sector, which it hopes will boost lamb sales.

“Generally speaking, lamb is widely under-used, underestimated and an unsung hero on many menus,” says EBLEX foodservice project manager, Hugh Judd.

Eblex predictions

EBLEX’s forecast for 2008/2009 does not make great reading for those involved in the UK’s lamb industry. With the lamb flock predicted to be around 2% lower than 2007/2008, statistics from AHDB Meat Services say: “In 2009 as a whole, the long-term downward trend in lamb slaughtering is expected to be more evident, and a fall in sheepmeat production is forecast.

This, combined with a stable level of imports, is expected to lead to lower supplies of sheepmeat available on the domestic market.”

Lamb still has it tough in 2008, but nowhere near the troubled times of 2007. With producers getting more help from ever before from the relevant meat boards and the supermarkets, there is no longer any need for them to suffer in silence.

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