Thursday, 9 December 2021
Last week US authorities removed the small ruminant rule, which was introduced more than 20 years ago banning imports of lamb from the UK and other countries where scrapie had been identified. Once both sides agree an Export Health Certificate this will enable a re-opening of the US market for UK lamb exports. In this article we look at what this will mean for the sheep sector.
Sheep production in the US
The US has a small domestic sheep sector, producing around 79,000 tonnes in 2021. This compares to production of around 300,000 tonnes in the UK. Production has declined in recent decades with USDA estimating animal numbers to be around 5 million head, well down on 51 million when production peaked back way back in 1884 (USDA).
Sheep-producing farms range in size from those with small flocks to large scale western operations. Two types of enterprises exist: stock-sheep production and lamb feeding. Stock-sheep producers manage grazing flocks on pasture, often on arid western lands with few alternative uses. Stock-sheep producers sell lambs that are either slaughtered or placed in feedlots. Feeder lambs are raised on forage, before they are placed in feedlots to be fattened and finished for slaughter.
Demand for sheep meat
Consumption of sheep meat is relatively low in the US at 0.4kg per person per year, compared to close to 4kg in the UK. (FAO 2021, retail weight equivalent). However, given its population of more than 329 million this still adds up to 162,000 tonnes each year.
The North East, with its high concentrations of Middle Eastern, Caribbean, and African consumers, is a major market for lamb products. According to USDA, the typical lamb consumer is an older, relatively well-established ethnic minority individual who lives in a metropolitan area such as New York, Boston, or Philadelphia in the Northeast or in San Francisco or Los Angeles on the West Coast, and who prefers high-quality cuts such as legs and loins.
Opportunities for the UK
The US is a big net importer of sheep meeting with more than half of sheep meat consumed in 2021 imported into the country. The major current suppliers are the two big global sheep meat exporters, Australia (about 75 percent) and New Zealand (about 24 percent).
AHDB export team estimates that around 6.5% of UK lamb exports could eventually be exported to the US. As total lamb consumption is expected to remain flat over the next 10 years, this would mean displacing some of those Australian and/or New Zealand imports to take a 6% share of the total US imports.
If this were to happen it would be an attractive for the sheep meat sector. The US tends to import higher value cuts, with an average import price of $9/kg (£6.80) according to US trade data. In context UK lamb exports average $6.4/kg (£4.80), with whole carcases dominating the trade. This gives an indication of the potential of this premium market
Increasing market access for UK sheep meat in overseas markets was a key recommendation from our Horizon report on sheep published earlier in 2020. An agreement with the US certainly fits the bill and is positive news for the sheep sector. The US is a high value market with a focus on high value cuts. This provides an opportunity for the industry to redirect some of our existing exports to achieve higher returns.
This is a good example of the value my colleagues in the AHDB export team provide our levy payers, working with the other UK levy boards and government to support market access and the commencement of commercial trade. Having secured sheepmeat (and beef) access to Japan in 2019, other markets are also currently being explored further with a view to commencing sheepmeat trade, for example Taiwan.
However, unlocking this opportunity will not be straightforward, given some of the challenges the red meat processing sector is currently facing in sourcing labour. Those high value US lamb imports will tend to be highly butchered cuts while present the export of whole carcases to the EU dominate UK sheep meat exports. It’s likely that greater processing capabilities within the UK will be required before product is exported to the US.