Analysis shows that GB lamb prices recently reached their lowest level since early 2013 and their lowest at this time of year for six years, 30p/kg below levels seen at the same time last year.
So far, lamb retail prices have not followed the downward trend in farmgate prices and figures released this week by AHDB Beef Lamb show that, in July producers received only 42 per cent of the final retail price, compared with 50 per cent the previous month and 49 per cent in July 2014. This is the lowest share of the retail price received by farmers at this time of year for seven years.
Stuart Roberts, chairman of AHDB Beef Lamb, said: “We continue to see a fairly unique set of circumstances, most of which are beyond our control. It is quite unprecedented. Normally, prices peak in the spring at the start of the new season, but this year they have been falling since Easter.
“The exchange rate is not helping as lamb prices historically are closely linked to the Euro because of the amount we export to the EU. On average, a 1p fall in the value of the Euro means a drop of about £1 in the value of a lamb.
“We also have issues with the export trade being disrupted by the situation in France. The problems at Calais are delaying shipments to the French market, which takes around half of UK lamb exports.
“This, together with depressed consumer demand in the Eurozone, all has an impact on our farmgate price.”
Other factors adding to the pressure on the lamb price include:
Lamb slaughterings up six per cent in the first half of the year compared to the same period in 2014
Anticipated strong lamb crop continuing meaning higher numbers for the rest of the year
Weak global skins market, as stricter Chinese environmental controls have reduced demand, dropping prices by around £2 per animal
Lack of support by retailers to highlighting availability of British lamb as we enter peak season.
As part of its long-term trade development strategy, the AHDB Beef Lamb board has signed off on a £1.157 million campaign for this autumn to promote quality assured lamb and beef, which includes television, digital and print advertising. The organisation is also bringing forward some of its trade marketing work and planned activity on the EU lamb campaign.
“It is vital all in the supply chain play their role in highlighting the quality and availability of domestic product in whatever way they can,” added Stuart.
“That is why initiatives like the lamb promotion campaign we are involved in with the Irish and the French, using match funding from the EU, are so important. We have been urging people to get behind it and shout about the resources that are out there to promote lamb.
“We as a board also signed off a significant marketing campaign focused on the mini-roast planned for this autumn.
“Within the constraints with which we work, we continue to do all we can to support consumer demand through our trade and consumer marketing activity, and expect to be revealing detail of the specific plans shortly.”
For a more in-depth analysis of the factors currently affecting the lamb price, please see our analysis on the AHDB Beef Lamb website.