Was there less New Zealand Lamb on our shelves this Easter?

The volume of New Zealand lamb on supermarket shelves is a constant talking point for people involved in the UK sheep industry. Easter is a particularly critical period as supplies of UK new season lamb start to come forward and demand at this time of year is traditionally high. It won’t come as any surprise that New Zealand is currently the largest competitor to UK lamb on the domestic market. However, the latest figures suggest a significant decline in volumes of New Zealand lamb on sale over the Easter period.

The New Zealand lamb crop in 2016 was 700,000 head smaller than the previous year, reaching its lowest level in over 60 years. However, slaughterings were lower at the beginning of the season due to a return to more normal conditions following drought in 2015/16. As a result, in the final quarter of 2016, 720,000 fewer lambs had been slaughtered, leaving roughly the same number of lambs on farm for the remainder of the 2016/17 season. This suggests that production for the rest of the season would be close to that seen in 2015/16.

As production rose in the first two months of the year so did export volumes, which were up by 11 per cent at 94,100 tonnes. During this period there were large gains in exports to China, New Zealand’s largest market. Volumes were 24 per cent higher at 35,800 tonnes as trade took off, with record prices for flaps with the Chinese New Year celebrations. There were also gains in shipments to the US which were up by 22 per cent, while volumes going to Malaysia more than doubled.

However, during this period volumes going to the UK actually declined by 19 per cent to 13,800 tonnes, including a similar reduction for chilled, which reduced to 8,200 tonnes. This was due to the weakness of sterling meaning that New Zealand product was not as competitive on the UK market, being 19 per cent higher in sterling than in January and February last year, yet six per cent lower in New Zealand dollars. This was compounded by higher levels of production and lower prices in the UK. The difference between the New Zealand and UK deadweight price is currently at its lowest level for the time of the year in over five years.

In March lamb production in New Zealand began to fall again, the currency situation remained in a similar state to that seen in the previous two months and production in the UK is thought to have remained at a high level. These factors would suggest that the pressure on New Zealand shipments to the UK continued in March, when most of the exports for Easter will have taken place.

With New Zealand lamb legs still visible on many supermarket shelves this Easter, it remains to be seen whether volumes actually fell. However, margins for New Zealand producers and processors continue to be under severe pressure.