Rising worry on lamb prices

Concern is rising about the soaring price of lamb, with one processor telling MTJ, "Lambs are too expensive to sell dead", and others questioning the market's sustainability.

With traders reporting prices nudging the £5/kg mark at £4.70/kg, some in the industry were worried about the knock-on effect among UK consumers, already reluctant to pay the premium required for a leg of lamb. Vion group communications controller Rob Smith said: "Prices were at record levels a little while ago and have continued to rise since. It's not sustainable."

Vion has certainly felt the pinch, making 181 redundancies at its Welsh Country Foods plant at Gaerwen. A 90-day consultation period has now ended, with 18 of the 181 staff being relocated within the business. Smith said: "When we made the decision on Gaerwen, it was down to poor trading conditions. Those conditions still exist and projections for future volumes indicate that the market ahead remains very challenging."

Others in the industry also highlight the concern over high prices. One industry insider said: "The market trend has shifted in the early part of year; where normally it dips as part of the cycle, the price has just stayed high begging the question of how the trend will go through the new season, when it normally shoots up."

Some in the sector point to the high levels of promotion on lamb in the supermarkets, with one saying: "There's a feeling they are having to promote to sell it, otherwise they're not going to shift any volume at all."

However, a recent survey by Eblex revealed relatively low levels of UK-sourced product on-shelf at Marks & Spencer, Sainsbury's, Tesco and Waitrose. But Asda bucked the trend with 70% British lamb available, although the retailer said a recent promotion on a leg of lamb at £5/kg was mainly meat from New Zealand.

At the same time, UK prices are being driven upwards by rising demand on the export market, and a continued decline in the UK flock; Defra figures show a 3% decline in the numbers of sheep and lamb to 21.3m at the end of 2009. Meanwhile, said Eblex, lamb sales have fallen from 97,202t for the 52 weeks ending 22 March 2009 to 92,427t for the 52 weeks ending 21 March 2010.

Nick Allen, sector director for Eblex, said: "There's no denying that lamb is now very expensive for many consumers, but it's a matter of supply and demand. Supply is currently low, due to a continuing decline in the breeding flock, so high prices are unavoidable. The export market for lamb remains buoyant, due to the low level of sterling and strong overseas demand for a high-quality product."

Bill Joyce, marketing manager at Hybu Cig Cymru Meat Promotion Wales (HCC), also played down any problems with the high prices, saying, "HCC does not feel price is having an unduly negative effect on sales. Welsh Lamb is a premium product and, as with other such items, its price reflects its quality."

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