Why Lamb Eating Quality Must Improve

It is a bad time to be a sheep farmer. The price for each lamb sold is nearly 20% lower than this time last year. Few businesses in any sector can stand such a severe drop in their income.

The reasons for the price fall are well known. On the demand side, a strong £ versus the euro means fewer exports to continental Europe, the Chinese and Russian markets are weakening, and China is reducing tanning capacity so wants fewer hides.  Most worryingly of all UK domestic consumption continues its downward trend.  And at this time of weak demand, supply is rocketing as New Zealand extends its season and the highest volume of home produced lambs since 2008 are forecast to hit the market this year.

Of all the factors contributing to the price drop, the only one within the industry’s control is domestic consumption. There have been recent calls for retailers to pass the lower price they are paying on to their customers, thereby stimulating sales, and calls for some retailers, who should be thoroughly ashamed of themselves, to stop stocking New Zealand lamb at this time when UK lamb is at its best and the NZ version out of season.

Both would help, but they are merely a short term sticking plaster over the long term gaping wound of plummeting domestic consumption. The National Sheep Association in its “Vision for Sheep Farming” says that consumption has decreased by two thirds since 1990, from 7.5 kg per person per year to 1.9kg today.

The problem is this - consumers buying lamb are too often faced with a poor quality product, yet are expected to pay a premium price for it. And no one in the industry has grasped the quality nettle.

So what is “poor quality”?

The picture above, which is typical of what is sold in all of the supermarkets, illustrates the main problem which is fattiness. According to EBLEX 57% of consumers say that lamb tends to be fatty, and I would bet that the figure is higher among younger people.  The problem is compounded by retailers selling product where too much fat has been left on.  Indeed, Tesco has the gall to quote fat levels “when the product is trimmed of fat”. Often too, the bit of the product visible in the pack looks lean but turn it over at home and the underside is more fat than lean.

So put yourself in the position of the consumer who has shelled out for the most expensively priced meat on the supermarket shelf, and yet has to throw away as much as half of the product they bought. No wonder that 45% of people say that lamb is too expensive.

Lamb eating quality is also variable.  It is well known that the older the lamb, the tougher the meat. Ram lambs left entire develop odd flavours after about 30 weeks of age. Lambs fed on concentrates tend to become fattier, and their fat tends to be yellower which some consumers do not like.

So lamb is fatty, expensive and variable in quality. No wonder that the domestic market is declining at such a rapid rate.

The depressing thing is that all of this is well known, and has been for at least 20 years. The old MLC did a study in 1994 identifying the same issues.

Where will it end? It is not over dramatic to suggest that lamb will become a sideline product in UK supermarkets, only picked up by consumers when it is sold at a knock down price.  Already the amount of shelf space given to it is shrinking every season. It does not receive the same innovation push as other meats. Out of sight it will soon become out of mind to the average consumer.

With a small domestic market the industry infrastructure behind it will crack. Farmers will cease farming. There will be less abattoirs because volumes are too low for viability. Auction marts and hauliers will suffer.

The landscape will change too as sheep cease to graze the hills and moorlands.

Yes, there may well be an opportunity for niche lamb production, but the large scale lamb industry as we know it today will be no more.

Yet no one in the UK has shown the necessary leadership to galvanise the industry and get the problems solved.

Red Meat Consumption Update - Beef and Pork Steady, Lamb Plummets

Shoppers bought 19% less lamb in the 12 months to mid July 2011 than they did in the previous year. (Source: Kantar Worldpanel)

By contrast, volume sales of beef are up 1%, pork and sausages up 2%, sliced cooked meats up 3%, and bacon up 5%. Overall, purchases of red meat have remained level with last year, indicating perhaps that lamb buyers have migrated to alternative red meat options.

This is perhaps not surprising given that the average price of a kilo of pork is £4.71p, and beef £6.12p, both around what they were last year. The price of a kilo of lamb though has increased by 14%, and now stands at £7.94p, the knock on effect of higher prices being paid to farmers for their live lambs.

Consumers are walking away, put off by having to pay around £5 for a couple of chops, or £13 for a small leg of lamb. Only 22% of people buy lamb every 4 weeks compared with 37% buying pork and 55% buying beef, and when they do buy they buy less – 1kg of lamb compared with 1.5kg for pork, and 1.4kg for beef.

The figures should make those advocating higher retail prices for beef and pork pause for thought. So far, despite the difficult economic climate, sales of these meats have held up well. The question is whether they are sufficiently special to persuade people to buy despite price hikes. Or would demand just fall as it has with lamb? And will a fall in demand lead to oversupply of pigs and cattle, and reduce the price paid to farmers anyway?

Many factors influence prices paid to farmers, and it is difficult to find a clear link between retail prices and those paid at the farm gate. The lamb experience shows that domestic eating of lamb can fall dramatically yet prices paid for live lambs stay buoyant due to external factors like a strong euro, less imports and shrinking breeding flocks. By contrast, when farm gate prices for beef fell sharply last year due mostly to high quantities of dairy beef cattle, retail prices hardly moved at all, and consumption stayed about the same.

What is clear though is that a push too far on price will probably result in big falls in the amount of meat eaten, and  that the fundamentals of supply and demand tend to hold true in the long term. So, if farmgate prices are to remain higher following an increase in retail price in the home market, additional outlets for British cattle and pigs need to be found urgently. Not an easy task.

Why the consumer is buying less lamb – insight from EBLEX shows it’s not just about price

This year consumers have bought 6% less lamb than last, and the decline seems to be speeding up. In the last 12 weeks consumers bought 11% less lamb than they did in the same period last year.

These are scary numbers and the pessimist might envisage a time not very far away when consumer demand for lamb is about half of its current level, with a similar fall in demand for livestock.

A recent EBLEX report gives clues about why lamb is out of favour, and what can be done to reverse the drop.

The 500 meat eating women interviewed each quarter by EBLEX say that the main reason they don’t buy lamb as much as other proteins like chicken, beef or pork is that lamb is too expensive.

So far so predictable many might think. But price is not the whole story. What makes people buy anything, even the very highest priced products, is their perception of whether the product in question is good value for money, and most cuts of lamb are seen as “not at all good”, or “not very good” value. The exception is lamb mince which is just about neutral – neither good nor bad.

All sorts of factors come into the value equation, and compared with other proteins lamb is rated worse on versatility, on ease of cooking, and especially on fat content. 57% of people say lamb “can be fatty” compared with 46% for pork, 28% for beef, and 5% for poultry.

Lamb falls down on other health aspects. Consumers feel that lamb is not as protein rich as beef, and do not realise it is as good a source of vitamins and minerals as beef.

The one positive point is that consumers view lamb as a tasty food.

So what should be done?

Lamb needs to be given an image makeover. EBLEX suggests that its versatility and health benefits need to be promoted. To this could be added using imagination to present unpopular cuts such as shoulder in a better way. One supermarket for example sells shoulder chops – butchered in a way that ensures they are just as tender as from the leg, but around half the price, and far less time consuming than cooking a roast.

Producers could focus even harder on reducing the number of over fat lambs sent into the food chain, and processors and producers together might find ways of ensuring that the product is consistently of high quality when it reaches the consumer, which is not always the case at the moment.

The EBLEX findings are important to all in the lamb supply chain. A strong home market forms the backbone of the sector, cushioning participants from the ups and downs of exports, and from the ebb and flow of lamb supply.It is critical to ensuring a consistently profitable future.

UK Lamb Market - Farmgate Prices Strong, Yet Amount Eaten Plummeting. Should We Be Worried?

To the relief of farmers across the land, farmgate prices for lamb remain firm. Eblex (the English Beef and Lamb Executive) attributes this to the strong euro boosting exports, and a reduction in UK sheep numbers. Eblex forecasts that the euro will continue relatively strong, lamb numbers will fall in the UK, Ireland and France, and good prices will probably continue.

The one cloud on this bright horizon is the effect high lamb prices are having on the amount people eat. Farmgate prices for lamb over the twelve weeks to end July rose by around 12% compared with last year, the average price in the shops rose by 17% and the amount that people bought fell by 15%. This compares with a fall of 5% for beef and level sales for pork, both of which have been hit by higher prices and consumer cutbacks because of the recession, although not nearly to the same extent.

The drop in lamb sales is startling, although not surprising. The shopper is now paying an average of £7.15p per kilo for lamb versus £6.22p for beef, £5.10p for pork and £4.02p for chicken. No wonder that fewer people are choosing lamb. All cuts are affected particularly roasting joints.

The question is where it will all end? What happens if the euro falls back, flock numbers increase as farmers, attracted by higher prices dip a toe in the water again, yet consumers lose the lamb buying habit, and there is little demand for lamb either at home or abroad.

The obvious solution is for supermarkets to slash the price when farmgate prices fall, and get people buying again. History would say though, that prices in supermarkets do not come down nearly as quickly as they go up, as we saw during the foot and mouth crisis.

If supermarkets don’t support the market who might? This could be an opportunity for butchers to become very price competitive, and attract customers with a banner comparing their prices to the local supermarket. It’s also an opportunity for the catering trade who sell disproportionately more lamb than supermarkets, and for direct sellers. The trouble as always is that supermarkets are so big they do dictate market trends.

The easy conclusion is that we should be worried about people eating much less lamb, as it is bound to have an effect on prices, perhaps not next year but soon enough. The harder bit will be working out how to reignite the lamb buying habit.

Note: Farm gate prices based on Farmers Weekly data, and consumption on Taylor Nelson Sofres data, published by BPEX.