Economic head winds have been forecast for all livestock sectors in the coming months as input cost increases and the ongoing impact of inflation challenge farm businesses.
The latest Agri-Market Outlook from the AHDB has predicted an increase in beef and lamb production following a period of favourable prices, but on the downside, it warns beef consumption is forecast to drop by 4% this year as food service demand slows and retail sales start to suffer with consumers switching to cheaper proteins.
Sheep meat production is expected to rebound from last year’s low levels, but again the outlook suggests demand will remain “extremely sluggish” in the retail and food
service sector on the back of rising prices.
The forecast is even bleaker for UK pig production, which is predicted to fall by 6% in the second half of this year.
The outlook warns pigmeat export markets remain challenging, with a slowing of demand from China.
It adds that higher GB pig prices and declining production could constrain future growth in exports, while imports are expected to grow in the second half of this year as declines in demand are outweighed by declines in production.
Meanwhile, although milk prices are currently high, they are only just keeping pace with rising production costs, and uncertainties around future prices and labour shortages are expected to see the dairy sector finishing the 2022-23 season between 1% to 3.8% lower year-on-year.
The AHDB’s lead analyst Patty Clayton summarised the outlook by saying the cashflows of all livestock sectors would come under pressure ahead of the winter, while the levy board’s economic strategist Sarah Baker said UK inflation had serious ramifications for the industry.
She added: “The impact of the Russian invasion of Ukraine is continuing to challenge global growth and is driving inflation across the board. Combined with the impact of leaving the EU and the Covid pandemic, inflation is undoubtedly the biggest issue in the UK, with serious ramifications for our agricultural economy.
“It’s no surprise that we see a contraction in the pig herd given the profitability challenges this sector has faced in recent months.
“Dairy may be the next livestock sector seeing financial challenges as we head out of summer and higher feed costs bite at a time when demand, and hence milk prices, could start to wane.”