The Value of the Sheep Industry: North East, South West and North West Regions
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The Value of the Sheep Industry: North East, South West and North West Regions The Value of the Sheep Industry: North East, South West and North West Regions A report by the Rural Business School at Duchy College on behalf of the National Farmers’ Union February 2018 CONTENTS Nlogo here 1 The Value of the Sheep Industry: North East, South West and North West Regions CONTENTS 1. Introduction 3 2. Demographics 4 2a. Overview 4 2b. England 4 2c. Regions 5 3. Contribution to the economy 5 3a. Production, consumption, imports and exports 5 3b. Abattoirs 6 3c. Profitability 7 3d. Employment 8 4. Contribution to the environment 9 4a. Land under environmental stewardship 9 4b. Woodland, hedgerows and walls 9 4c. Peatland and moorland 11 4d. Economic value 11 4e. Regional environmental summaries 12 4f. Environmental contribution summary 13 5. Carcase specification and composition 14 6. The structure of the UK sheep industry and regional variation 14 7. The challenges of sheep farming in the uplands 16 8. Conclusion 18 9. References 20 10. Appendices 22 10a. Appendix 1- Sheep Farm Outputs and Costs 22 10b. Appendix 2- South West LFA Case Study Figures with Suppliers 24 10c. Appendix 3- South West Lowland Case Study Figures with Suppliers 26 10d. Appendix 4 –North West Lowland Case Study Figures with Suppliers 28 10e. Appendix 5 – North East LFA Case Study figures with Suppliers 30 2 The Value of the Sheep Industry: North East, South West and North West Regions 1. INTRODUCTION The Rural Business School was commissioned by the National Farmers Union to produce a report highlighting the value of the sheep industry to the wider economy, focusing on the three largest sheep producing regions in England. Indeed, the North East including Yorkshire and Humber (NE), the South West (SW) and the North West (NW) represent some two-thirds of England’s sheep production. Brexit poses a risk to the future of sheep farming, particularly due to the high reliance on the Common Agricultural Policy (CAP) in the form of direct payments and subsidies. It has wide implications for the whole industry, including threatening trade both within and outside of the European Union (EU). Small changes to trade deal tariffs or support payments are likely to disturb market stability, which would have wide implications in terms of percentage swing on domestic supply and net-trade balance. Through drawing together hard data from various sources, the report gives a snapshot of the breadth and depth of the sheep industry, highlighting its value to both the environment and to the economy. Maintenance of the countryside is key to the environment and tourism, which together with other local and regional businesses in the supply chain, sustain the social fabric of local rural communities across the regions; this is of particular importance in both the upland and more remote lowland areas across all three regions studied. Businesses both up and down the supply chain depend on a profitable sheep sector and the report underlines the importance of continued support to the sector, be it through market development, regulation, business development or direct measures. 3 The Value of the Sheep Industry: North East, South West and North West Regions 2. DEMOGRAPHICS 2a. OVERVIEW The sheep sector is a major contributor to the UK economy, and in 2015 had a national flock of 33,337,000 head of sheep and lambs(1), across 72,272 holdings(2), producing 300,200 tonnes of mutton and lamb(1). The national flock is made up of lambs one year and under (50%), breeding ewes (48%), and other sheep and rams (2%)(1) averaging 461 head/holding. The structure of the UK sheep industry is not typical of that seen in the rest of the EU, and in 2015, had the largest average flock size. The UK sheep sector is much more consolidated and, unlike other EU member states, has the largest number of holdings with over 500 head of sheep and lambs (26%) in contrast to just 5% of holdings of those sizes in the EU(3). 2b. ENGLAND A significant proportion of the UK sheep flock is found in England, 15,142,000 (45%), throughout 35,869 breeding ewe holdings, equating to an average flock size of 422(1). Despite less than half of the UK sheep flock residing in England, 66% of total sheep meat production comes from this region(1), which is likely due to stratification (page 14). Since 2015, the number of sheep in England has continued to grow and has increased from 15.1 million, to almost 15.3 million in 2016, an increase of 0.9%. The female breeding flock has also increased by 0.8% to 7.1 million and the number of lambs increased by 1.0% to 7.8 million in the same period(1,2). This report primarily investigates three of the five largest sheep producing regions in England; the North East including Yorkshire and Humber (26.7%), South West (20.6%) and North West (19.6%)(4). Distribution of Sheep in England by Region 2.2% 8.0% North East (inc Yorkshire and Humber) 8.3% 26.7% South West North West West Midlands 14.6% South East (incl. London) East Midlands 20.6% East of Engand 19.6% Figure 1: The proportion of sheep in England in 2015, by region. Source: Defra Statistics: Agricultural facts- commercial holdings at June 2015. 4 The Value of the Sheep Industry: North East, South West and North West Regions 2c. REGIONS The majority of published figures concerning the sheep industry are based on a national (UK or England) scale; therefore forthcoming regional figures are an estimation, deduced from the percentage of sheep found in each region, (NE 26.7%, 20.6% SW, 19.6% NW) as a proportion of England, assuming an even stocking rate. North East 9,577 sheep holdings 1,884,219 breeding ewes 4,042,914 total head of sheep South West 7,389 sheep holdings 1,453,742 breeding ewes 3,119,252 total head of sheep North West 7,030 sheep holdings 1,383,172 breeding ewes 2,967,832 total head of sheep 3. CONTRIBUTION TO THE ECONOMY 3a. Production, consumption, imports and exports The overall value of sheep meat in the UK in 2015 was £2,216m(1). During 2015, the UK produced 300,200 tonnes of sheep meat and offal, exported 83,500 tonnes (£308.5m) and imported 100,500 tonnes (£405.3m), resulting in a net consumption of 317,200 tonnes. At this time, the UK was the largest producer of sheep and goat meat in the European Union, contributing 40% of all meat production(1). Typically, 64% of UK production is consumed domestically and 36% is exported(5). Regionally this amounts to: North East 52,626t sheep meat and offal produced 10,130t exported 14,670t imported 57,170t consumed South West 40,600t sheep meat and offal produced 7,820t exported 10,050t imported 42,800t consumed North West 38,630t sheep meat and offal produced 5 The Value of the Sheep Industry: North East, South West and North West Regions 7,450t exported 13,170t imported 44,300t consumed It is likely that we import more sheep meat and offal than we export due to the seasonality of lamb. Indeed, this is reflected by the source of our imported meat, with 89% of fresh and frozen sheep meat originating from Australia and New Zealand, whose seasons are opposite to ours. During 2015, the UK also produced more than 28,700 tonnes of wool(5). Note: Regional import figures are calculated based on human population distribution. For example, assuming consumption is equal across the population, we can deduce that, as 14.6% of England’s population is found in the North East, 14.6% of imported sheep meat and offal will arrive in that region. 3b. Abattoirs Despite a decrease in the number of abattoirs in England over recent years (Fig. 2), sheep throughput has increased by 8%, indicating an increase in size of existing abattoirs. The predominant sheep abattoir size in England has a throughput of between 1,001-5,000 GLUs per week. However, despite there being fewer large scale abattoirs, their total throughput is significantly higher than the combined total of the smaller abattoirs(1). Sheep Abattoir Numbers, England, 2012-15 164 162 162 160 159 158 157 156 154 152 152 150 2011 2012 2013 2014 2015 2016 Year Figure 2: Number of Sheep Abattoirs, England, 2012-15. Source: UK Yearbook, 2016, Sheep.2016. Interestingly, since 2012, deadweight lamb prices have fallen from an average price of 401.3p/kg in 2012, to 375.8p/kg in 2015, while live weight sheep prices have risen from 64.5p/kg to 65.2p/kg over the same period(1). The former could be due to the vagaries of deadweight reporting, although there are increasingly worries about lack of competition in the red meat sector associated with the consolidation of processing capacity. 6 The Value of the Sheep Industry: North East, South West and North West Regions 3c. Profitability The profitability and impact of sheep farming on the wider economy of the three regions was investigated through utilising information from the Farm Business Survey’s 2015/16 dataset of representative grazing livestock farms in each area, together with a series of individual farm mini- case studies. These mini-case studies included farms to analyse expenditure by category and to pinpoint the main destinations of this spend (Appendices 2 & 3). This was augmented by further mini-case studies in the livestock supply industry along with representative farm veterinary practices, agricultural supply businesses and meat processors.