• Production is expected to decline for 2024 by around 1%, following contraction in the breeding flock, and limited expansion in the lamb crop.

• Consumption is expected to fall by 2% compared to 2023, as eating-out has not returned to pre-Covid levels, and retail volumes suffer from the cost-of-living crisis.

• Imports are forecast to expand, up around 4% from 2023, as lower priced product from Australia and New Zealand drives growth in volumes.

• Exports are forecast to decline by 1%, in line with lower domestic production.

2023 was a year of change for the UK sheep market. Old season prices in the first quarter were pressured on 2022 prices, with growth from April. New season lamb prices from August onwards saw prices exceed 2022 until the end of the year.

Production for 2023 fell slightly according to Defra statistics. This came from a fall in adult sheep kill, and slightly lower clean sheep carcase weights.

For the year to date (Jan – Nov), the UK imported less sheep meat than 2022, especially in the first half of the year. The second half of 2023 was marked by increased pressure from imports, following the ratification of key trade deals with Australia and New Zealand. While imports were boosted, it was not enough for growth overall. Meanwhile, exports grew on 2022, as volumes were elevated from the second half of the year.

In 2023, total lamb consumption volumes declined slightly (-1%) year-on-year. Demand from retail was reduced as consumers' budgets were squeezed, but this was somewhat mitigated through growth in foodservice volumes.

GB deadweight lamb SQQ (overall)

Source: AHDB

**April 2024: updated production outlook available here**

Risks

These abnormal risks are likely to impact the sheep flock throughout 2024, and we are aware of an increased number of cases. However, we have assumed a minimal impact on production at the UK level in 2024 as this is difficult to predict and quantify. A more severe impact would make our production forecast look optimistic due to potential issues with ewe and lamb mortality.

• Schmallenberg virus: depending on the timing of infection, it can increase barren rates at scanning, cause abortions, and lamb malformations. This can lead to lambing difficulties, resulting in a decrease in the potential lamb crop for 2024. The impact can particularly affect January/February lambing flocks with ewes synchronised for a tight lambing period due to peak midge levels in August/September.

• Bluetongue virus: depending on the strain of virus, scale of any outbreak, and the timing of a disease incursion. The virus can reduce milk yield, cause sickness, reduce reproductive performance, and impact ewe and lamb mortality. Mortality from bluetongue is variable and may be high for some flocks, so this could have a significant impact if a large-scale outbreak were to occur.

• Other impacts from bluetongue include disruptions due to impact of prolonged animal movement and trade restrictions, administration, and additional costs as a result of restrictions. This includes the need for a licence to move animals out of the zone, which can take up to five days to process. Animals can only exit the zone to move directly to slaughter, and may require farmers to change their usual routes to market. Farmers may incur costs from reduced market access, including export markets. We will continue to monitor the situation closely.

Breeding flock and lamb crop

The size of the breeding flock at December 2023 is unknown as at time of writing. We would expect a slight contraction (-1%) in the flock size for 2023, given the fall of 6.1% in the number of ewes for first time breeding at June 2023.

We are predicting a subsequent contraction for 2024, at -0.5%. We don’t expect the breeding flock to grow in 2024 for a number of reasons. Uncertainty has been an overriding sentiment over recent times, influencing all aspects of on-farm decision making. Changes to on-farm schemes, such as the Sustainable Farming Incentive (SFI), have contributed to this. Although recent announcements may be more attractive to those who can access areas of permanent pasture or utilise some of the options now available, such as herbal leys.

High cull ewe prices may have also had an impact, leading to destocking of ewes to support margins. Similarly, these higher ewe prices have impacted on replacement costs.

Early industry reports have seen scanning slightly elevated on last year, but this has varied, with some reports of poorer scanning than a year ago. However, last year saw low scanning results due to poor ewe condition. Looking into 2024, ewe condition is anticipated to be better than last year thanks to a better summer/autumn, with more consistent forage for condition. However, there are concerns on the quality of forage and dry matter intake due to an exceptionally wet season.

The lamb crop for the 2024 season (spring 2024 – spring 2025) is predicted to be 16.4m head, with growth of around 2% from last year, assuming previously mentioned disease risks have minimal impact condition or mortality.

H1 2024

According to Defra statistics, the number of lambs under one year old fell by 6.1% from June 2022 – 2023 to 15.5m head. From June – December 2023, 7.4m lambs were slaughtered.  We estimate that 3.9m lambs will carryover from January – May 2024, a drop of 10% (430,000 head) from 2023.

The number of new season lambs to be slaughtered during the first half of the year is expected to be around 1.6m head. This is a fall of 65,000 head from the same period in 2023.

H2 2024

In the second half of 2024, assuming a typical slaughter pattern alongside the forecasted lamb crop, we are predicting 6.6m lambs to come forward from July - December, growth of 5% (310,000 head) from last year.

Actual and forecast UK clean sheep slaughter

We are expecting a fall in adult sheep kill for the first half of the year compared to 2023, before rebounding in the second half, to remain stable at 1.6m head for 2024.

Actual and forecast UK adult sheep slaughter

Total sheep meat production for 2024 is set to fall by 1% from 2023, to 283,000 tonnes in 2024. This is following revisions to Defra slaughter and production figures for 2023. We expect clean sheep carcase weights to dip in the first half of 2024 given forage/feed issues and continued disease risks.

Imports

In the first 11 months of 2023, the UK imported 45,200 tonnes of sheep meat. This is a fall of around 6,700 tonnes (13%) from the same period in 2022. Import declines mainly came from the first six months of 2023, as the end of May marked the ratification of trade deals with Australia and New Zealand. The trade deal with Australia allows for access to the UK market at 0% tariffs for up to 30,000 tonnes (product weight) of sheep meat in 2024. The New Zealand trade deal only allows for 0% tariff (carcase weight) when the WTO quota has been 90% filled, which hasn’t happened for many years. While imports have been facilitated by trade deals, wider market factors such as the relatively low price of Australian lamb have been a key driver of growing volumes.

Despite a fall in volumes, New Zealand remains the largest supplier of sheep meat imports. Production in New Zealand is expected to make some recovery for 2024. Sheep legs remain the largest product, at 16,800 tonnes (split 80:20 frozen/fresh), making up 67% of the New Zealand total in 2023. Industry commentary highlights the UK retail market has sustained demand for smaller New Zealand sheep legs.

Imports from Australia began the year lower than 2022, but have since gained ground to end the year above 2022. Sheep legs (fresh and frozen) make up 24% of imports, as commentary from industry suggests that some sheep legs from Australia are too large for retail but more suited to foodservice in the UK. However, this may pose a challenge to other importing nations, such as Ireland (totalling 7,400 tonnes so far in 2023), as this also often competes in foodservice channels. Australian production through 2024 will determine volumes, given the price competitive nature of their imports. Given this, we expect to see growth in Australian product entering the UK providing stiff competition to New Zealand imports, especially in the first half of 2024.

Overall, imports are predicted to increase from 2023 levels by around 4%, with growth highest in the first half of 2024 compared to the previous year.

UK fresh and frozen sheep meat imports by partner (YTD Jan-Nov) with market share

Exports

In the year to date (January – November) UK exports of sheep meat totalled 75,000 tonnes. This is growth of 11% from the same period in 2022, with the European Union (EU) remaining our main destination. Shipments to France totalled 50% of our exports so far in 2023, up from 47% in 2022, to 38,000 tonnes. Volumes into France are at the highest level since 2015.

Carcases continue to account for the majority of product exported – at over 60,000 tonnes for 2023 – just over 80% of our total sheep meat exports. Exports of lamb carcases grew by 9,000 tonnes from 2022, at the expense of other products.

Moving into 2024, exports into the EU have the potential to grow as their domestic production contracts by around 1% and consumption holds steady, supported by the role of sheep meat in religious festivals. Industry reports suggest that scanning rates in France are lower than expected, and as such may rely on growth in imports to sustain demand. The UK may be able to capitalise on this, given the large market share of our exports into France.

However, we expect lower UK production will limit volumes available for export, with contraction in export volumes for 2024 anticipated at -1% compared to 2023. There may well be some risk of disruption to exports into the EU following the implementation of vet attestations.

UK fresh and frozen sheep meat exports by partner (YTD Jan-Nov) with market share

2024 outlook

In 2023, total lamb volumes declined by 1% year-on-year. While retail performance was down, strong year-on-year foodservice performance, particularly for dining out, mitigated some of these losses (source: AHDB/Kantar, 52 w/e 24 December 2023). For more details on 2023 trends and cut specifics, see our retail and foodservice dashboards.

For the year ahead we expect inflation will continue to fall, and wages will continue to rise. The overall economic outlook will improve, although there are headwinds including world conflicts which have the potential to derail this.

This means that some shoppers will feel genuinely better off, whilst others will continue to struggle and look to make savings when then can. After three years of overcoming challenges and reconsidering how to spend their money we expect any changes in shopping behaviour will be gradual.

Overall lamb volumes for 2024 are expected to be down -2% compared to 2023 and -16% compared to 2019. This is due to the combination of overall eating-out not returning to pre-COVID levels and retail sales of meat suffering from the cost-of-living crisis.

Lamb volumes

Source: AHDB

In retail, while lamb has seen the smallest price increase year-on-year in the wider meat, fish and poultry category, it still commands one of the highest price. With continued pressure on consumers budgets expected for at least the first half of 2024, we predict the trend of switching to cheaper proteins to continue which will negatively impact lamb volumes purchased. Despite this, we do predict to see improvement around key seasonal events, such as Easter, Christmas, and other religious festivals such as Eid as retailers are expected to continue to utilise strong promotional activity for these periods which are successful in driving volumes purchased.

Wider trends such as shoppers looking to reduce food wastage, and the decreased need for variety at mealtimes will impact on how often and how much consumers buy in 2024.  Consumers are most likely to choose a meal containing lamb for enjoyment reasons (source: Kantar Usage), and with price pressures expected to continue for at least some of the year, priorities will remain shifted at mealtimes towards being quick, cheap and easy above all else. We predict that in the first half of 2024 lamb volumes via retail will hold in line with last year, although we believe there will be some improvement towards the end of 2024.

The out-of-home market for lamb is expected to remain elevated compared with pre-covid levels, however we are predicting that is also likely to struggle versus last year. Dine in, on-the-go and takeaways are expected to decline year-on-year, both because of consumers looking to restrict spending, but also because of lamb commanding less space on menus compared with cheaper proteins.

Opportunities for the lamb industry to improve demand include:

• Providing inspiration for tasty, easy to cook lamb dishes in a way that gives reassurance to consumers who may be less familiar with how to cook lamb
• Ensuring that lamb is present on menus to capture out of home dining occasions.
• Capitalising on seasonal synergies consumers associate lamb such as Easter, Christmas and festivals such as Eid, with strong campaigns and depth of promotion on key products.
• Addressing health concerns by communicating the health benefits of lamb, such as being a good source of B12, iron and protein.
• Encouraging consumers with the right messaging in-store, online, on pack and in foodservice.
• In the longer term, look to maintain and build consumer trust, demonstrating where farming values (animal welfare, environmental stewardship and expertise) are shared with consumers. See our consumer reputation landscape hub for more information.

AHDB have a range of marketing activities planned for the year, including the new Let’s Eat Balanced campaign. Please visit our marketing pages for more information. For more insight around consumer demand visit our retail and consumer page.

What does this mean for GB prices in 2024?

Prices throughout 2023 remained strong thanks to lower domestic supplies, fewer imports, and growth in exports. Prices in 2024 could see continued uplift due to a lower carryover compared to 2023, before new season lambs come forward. However, with an expected production increase in the second half of the year, coupled with lower consumption and a shift in trade balances, we could see prices pressured in the new season.

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