Wednesday, 18 January 2012

Exports: to the Eurozone and beyond

Beef and sheep producers enjoyed some well-deserved good cheer in 2011, as livestock prices reached unprecedented levels, partly as a result of strong export sales. The indications are that the outlook for the industry is also positive and we can be optimistic about this situation continuing throughout 2012 and beyond.

However, the situation in the Eurozone continues to concern many in the industry, with Farmers Weekly (Challenges of a weaker Euro for UK agriculture, 13/01/12) stating that beef and lamb producers are having to ‘battle for business’ as a result of a weaker and more volatile Euro.

It’s true that we cannot afford to ignore what is going on in the Eurozone economy – this is still the main destination for our beef and lamb exports, therefore reduced consumer demand in these countries would undoubtedly have a negative effect on trade. The fact is that one in five of our lambs ends up on a French dinner plate and our closest neighbours are also our most important overseas customers.

Fluctuations in the Euro exchange rate will undoubtedly affect the price we receive for our product - but claims that a weak Euro could make our exports to the Eurozone unsustainable are failing to take into account the bigger picture. Back in August, we published a blog post addressing this issue (Currency fluctuations should not affect export confidence), and the points made in this blog still stand.

Currently, exports to the Eurozone remain healthy. In addition, a large number of non-EU markets have opened up to UK beef and lamb since 2010, indeed in January-October 2011 we saw a 74% increase in sheepmeat exports to non-EU destinations, and a 67% increase in beef exports. Work continues to develop further new non-EU markets, including priority countries such as Russia and China – although the latter certainly is still likely to be a few years off.

Meat exports are increasingly global in their nature and it is therefore important not to underestimate the effect of worldwide supply and demand. With global supplies remaining tight and demand increasing, it is very likely that demand for our product will remain robust for the foreseeable future.