APRIL 23, 2010: Although British sheep numbers are still falling, the rate of decline slowed down in 2009.

Confidence is returning to the industry, with an increase in productivity and positive wafer thin margins. Painting a cautiously optimistic picture at the AHDB Outlook 2010 conference, head of economics at Quality Meat Scotland, Stuart Ashworth, said producer prices were unlikely to fall in the shorter term. “A lot of money was spent by many producers looking after their sheep this winter, but I have seen early signs of confidence returning to the industry, with an increasing number of lambs being held back for the breeding flock,” he said. Improved farm gate prices meant producers’ margins should continue to improve as long as current monetary exchange rates between sterling and the euro continued to favour UK producers. Sector pressure But, Mr Ashworth warned the processing sector was still under pressure. He pointed out sheep numbers across the European Union – as well as in the other major sheep producing countries (such as Australia and New Zealand), were also falling, which had opened up new opportunities for the UK to build up its lamb export market to countries like Belgium, Italy and Germany, thus reducing the UK’s dependence on the country’s traditional sales to France. The UK was now exporting up to 38 per cent of its lamb crop, compared with just 31 per cent in 2004 and he had found checking exchange rates every day was now currently even more important than the lamb price. While the proportion of imported fresh chilled products (which competed directly against home-grown lamb) increased, imports generally had remained stable, so the actual amount of sheep meat available in the home market had fallen. The prices, however, had remained firm. Margins warning But, he warned that margins were likely to remain slim for producers for some time and would continue to be squeezed for the processors. In addition, any detrimental changes in future CAP policies, or new moves to tackle climate change and global warming, could knock confidence. He was also concerned about rising competition between pork, beef and lamb.

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