Market Update

The US Sheep Market

The USDA have produced proposals to lift a 25 year ban on the import of UK sheep meat products into the US market.  This follows the lifting of a similar ban for Irish lamb and sheep meat products in 2015. The US has already opened up its market to UK sheep genetics, and UK breeders and genetics companies may see some benefit from this. But just how much sheep meat do Americans consume? What is the size of the market, and will it make much of an impact or the sector in the UK?

This is of course unrelated to Brexit, as the TTIP (Trans-Atlantic Trade and Investment Partnership) negotiations were expected to lead to some opening up of the US market to British lamb products. The UK minister George Eustice was keen to claim a potential boost of £35 million to the UK rural economy, but it is worth noting that sheep meat consumption in North America is very low – 0.41 only kg per capita in 2015, compared to an EU-28 average of 1.85 kg per capita. Despite immigration from sheep meat eating parts of the World, according to the OECD US sheep meat consumption per capita is expected to fall to 0.34 kg per capita (-17%) by 2020, with total consumption falling by 13.3%.

A number of reasons are often given for the decline of the US sheep sector – including increased losses to predators, changes in consumer preferences, and foreign wool subsidies. The US is not self-sufficient in sheep meat, and despite these very low levels of consumption the US is still the Worlds 4th biggest export market – behind China, the UK and France. Almost half of Americans have never tried lamb, and the US Ambassador to the UK has even complained about the number of times he has been served lamb whilst in the UK. The US sheep flock has contracted over the last 60 years, but at the same time has become more competitive and efficient. There has been a trend away from wool sheep to short-haired breeds, due to better adaptability to humid climates, and ease of maintenance. US domestic production is growing in 2016, with an increase in sheep numbers to reach 5.3 million head, compared with a total of 33.3 million sheep and lambs in the UK. US producers face a number of challenges including a shortage of approved animal health products for minor species (which in the US includes sheep), a growing problem of drug resistance to sheep parasiticides, and a shortage of experienced sheep veterinarians.

UK suppliers would compete with existing imports from Australia and New Zealand. In 2015 the US imported 93,440 MT, but this is expected to fall to 71,150 MT by 2020. Despite the recent fall in the value of the pound against the US dollar, UK lamb is still likely to remain expensive compared with Australian and New Zealand product.  It will clearly take a lot of effort for UK lamb to become a success in the US, market, marketing will need to focus on convincing US consumers that UK lamb is a quality product, with a lot of emphasis on taste, food safety (a natural grass-fed product produced without treating animals with artificial hormones etc.), and good environmental credentials.

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