Factors Combine to Boost Lamb Prices

Since the beginning of the year, lamb prices in Welsh marts have reached high levels not seen for some years.

According to figures from Hybu Cig Cymru – Meat Promotion Wales (HCC), lambs have been fetching above £2 per kilo for most of 2018, but have recently increased further to a weekly average of over £2.50, compared to £1.88 in the corresponding period over the last two years.

Demand, evidently, is exceeding the current supply, and this is caused by a number of factors - the weakness of the pound, the strength of exports, an early Easter, and the policies of UK retailers.

For some months HMRC's trade figures have shown a significant boost in the volume of lamb is exported abroad. The majority of the increase was to Europe; for example to Germany where British lamb imports during January 2018 were 63% higher than the same month last year.

HCC Data Analyst, Glesni Phillips, explained that the position of the pound is an important factor; “The weak pound helps Welsh meat to compete abroad - we've seen a huge increase in exports to countries in Europe and beyond - and of course make imports more expensive. This, combined with a reduction in the supply of lamb of the southern hemisphere, has affected some supermarkets' policies in terms of buying less meat overseas.”

"We're in the middle of a high farm-gate price period in a number of sectors, including beef, but because our sheep industry is very dependent on international trade, the pattern is most dramatic for lamb," added Glesni.

"Other factors are also at play, including the impact of bad weather on the supply of animals and an early Easter," she said, "but to a large extent the high price reflects the temporary political situation, namely that the result of the Brexit Referendum weakened the Pound, but the industry can still trade freely with Europe until March 2019. "

"It's difficult to predict how lamb prices will move over the next few months," said Glesni, "but in the long run much will depend on the type of agreement reached between Britain and Europe; anything less than free trade would be a big challenge for the sheep sector. "

HCC is working with AHDB to analyze Brexit's potential impact on agriculture. A series of workshops were held across Wales in January and February to help farmers prepare, and research continues.