Australian lamb, the story so far in 2022

Back in February, Meat and Livestock Australia released its outlook for the Australian sheep sector with forecasts for the flock size, slaughter and trade.

• Lamb slaughter was expected to increase by 7% to 21.6 million head
• Lamb production was forecast to increase from 502,000 to 540,000 tonnes
• Exports were expected to increase to 307,000 tonnes, up from 283,000 tonnes in 2021.

But what has happened so far in 2022? In the first three months of the year, 4.97 million Australian lambs have been slaughtered, steady compared to the same point last year. However, in line with the MLA forecast, carcase weights have been heavier. Together, this means lamb production is 2% higher so far in 2022. In February, a greater number of lambs was expected to come to market in early to mid-2022, and so production is still set to increase further.

In the first four months of the year, Australian lamb exports totalled 91,500 tonnes, 9% higher year-on-year. Within this, exports to the US have increased by 20% to 23,300 tonnes, while trade with China has contracted, by 18% to 19,200 tonnes.

The current spread between Australian and GB lamb prices is particularly high, but global shipping constraints mean that markets closer to home retain their appeal. Exports to the UK have increased by 50% year-on-year, to 2,600 tonnes, in the period to April, although the UK is still only the 9^th biggest market by size for Australian exports in the year to date.

When the Australia-UK Free Trade Agreement enters into force, Australia will benefit from enhanced access to the UK market. For sheep meat this means a tariff-free volume of 25,000 tonnes of sheep meat in the first year, increasing to 75,000 tonnes by year 10. Analysis done by Harper Adams and AHDB raised the following key points for lamb sector:

• The model suggests there will be a large increase in Australian imports in percentage terms. However, this is from a low base, and volume changes are relatively small
• Total UK imports are not expected to increase significantly, with much of the increase from Australia offset by reduced imports from elsewhere
• Results show that changes in the UK domestic marketplace (production, price etc.) are relatively small
• Key caveat: These results assume that China/Australia trade relations stay the same. If the relationship was to breakdown, that could see much more Australian lamb on the global marketplace looking for a home. Given the level of tariff-free access proposed in the agreement in principle, there is scope for Australia to increase the amount of tariff-free lamb destined for the UK, even after these results are taken into account

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