A drop in lamb prices over the last eight weeks has fuelled fears in the hill sheep sector over its longer-term sustainability. NFUS is urging buyers to send the right signals to producers in 2007.

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After a bad start to 2006, lamb prices improved from March onwards. However, there has been a slump in prices since November. Over the last eight weeks, prices have been, on average, three per cent lower than the year before, despite retail lamb prices remaining firm.

Scottish Executive figures show a further drop in sheep numbers across Scotland, with nearly 300,000 sheep coming off farms between June 2005 and June 2006.

NFUS has stressed that an increased emphasis on local, quality food presents a real opportunity for the sheep sector. However, it cannot realise its potential in the absence of sustainable prices. Following a series of hill farm events around Scotland last Summer, NFUS is developing a number of policies to forge a sustainable future for the sector. The Union’s focus covers market issues such as pricing and branding but also areas where the industry can strengthen its own position, for example by better meeting market specifications.

NFUS President John Kinnaird said:

“The start of last year was marked by a reduction in finished lamb prices. The result was more sheep coming off the hills and I have concerns we may see the same again this year. At a time when support and recognition of locally produced food has never been higher, there is a real opportunity to forge local markets and add value to Scottish sheep production. However, to develop local markets, farmers in the area need returns which cover the costs of production and provide for reinvestment.

“The drop in farmgate prices at the end of last year contrasts with retail prices which remained broadly consistent and, if anything, rose slightly. If the market place is to get supply, it has to send more positive signals. In return, the industry must do its bit to meet market specifications.

“The hill farm events we held across Scotland last Summer emphasised the concern amongst our members over the future of hill farming. We’ve seen another 3.6 per cent drop in sheep numbers over the year. That has an impact, not just on individual family farms but on the local processing infrastructure and food industry.

“I have no doubt there is real potential in the hill sheep sector and NFUS is developing a policy document to map the way ahead. The key to success will be a combination of industry efforts to strengthen its own position and prices which properly reflect quality.”

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