UK meat production

BEEF

Domestically, the UK beef market has struggled for the past two years. Reduced slaughter volatility numbers and a recent levelling of the GB R4L average deadweight price suggest that the market is close to equilibrium, but lacklustre consumer demand evident at both retail and food service level is pushing prices lower. The disruption to foodservice caused by the coronavirus outbreak has yet to be factored into markets, but is likely to result in a major shift to cooking at home and hence meat purchases from farms, butchers and supermarkets.

Exports are likely to play an increasingly important role in balancing the supply and demand situation and setting domestic prices. Market access negotiations to non-EU countries are now taking place and recent announcements of China and the US lifting 20+ year UK beef import bans are promising signs of progress. These markets alone present an almost £300 million opportunity to sell high-quality, hormone-free product into key growth markets.

SHEEP-MEAT

The UK sheep-meat market has traded in line with five-year average prices, having retreated from above-average prices over the past two years. Brexit uncertainty has reduced breeding flock numbers 4% year on year, the largest change for a decade. The reduction has followed the longer-term trend of year on year declines in domestic consumption rates. Imports and exports remain largely in balance by volume with the two largest classes; UK whole carcass exports into the EU offset by NZ lamb leg imports. This trade accounts for seasonal fluctuations in production and consumer demand prior to the Easter spike.

UK sheep-meat producers face considerable uncertainty over the coming months while transition period trade negotiations play out. Estimated impacts of a ‘no-deal’ Brexit could result in tariff rates as high as 45%–50% of carcass value on EU27 exports effectively forcing close to 33% of domestic lamb production into other markets. The scope for displacing imported product with this extra supply is limited due to the highly seasonal nature of the production and consumption cycles, the manufacturing capacity available in the UK and carcass balance issues because UK imports are skewed towards leg cuts, while the majority of exports are whole carcasses.

_{Read the other articles within Spotlight: Red Meat Outlook below}