ONE unexpected side-effect of the BSE crisis is the possibility of a prolonged shortage of imported lamb.

Such a shortage may safeguard the returns of Scottish sheep producers, whose buoyant output prices in the wake of the beef scare in late March relieved some of the financial stress in the livestock sector.

Predictions of scarcity should reassure farmers who have feared that easier access to UK markets granted to New Zealand suppliers under last year's Gatt international trade deal would eventually lead to a flood of imports, weakening UK prices.

Instead, some New Zealanders are now saying that had present market conditions prevailed a couple of years ago, they would not have been able to fill even their former quota, let alone exploit the new larger volume entitlement.

The BSE crisis obscured the fact that the lamb market had already been boosted by the earlier mad cow disease scare of 1995. There was some evidence, perhaps misleading, of the New Zealanders taking advantage of this to the detriment of UK producers.

New Zealand Lamb Promotion Council director John Mabb quoted consumer purchase estimates by the market research company AGB in February: ``The fall in beef sales of 17% in January, reflecting renewed media attention for BSE, was almost mirrored in an increase in total lamb sales of 20% with New Zealand lamb sales up an even healthier 28%.''

As New Zealand frozen carcases were selling about 5% cheaper in the wholesale market during January than in early 1995, this could be interpreted as buying market share by price-cutting, and perhaps preventing home-slaughtered lamb returns reaching levels they would otherwise have attained.

However, importing company salesmen said privately that the evident cheapness of the New Zealand product reflected earlier decisions to retreat from over-ambitious pricing that had hit sales badly during their 1994-95 marketing season in the UK.

Events in the wholesale lamb marketplace since the recent crisis offer unambiguous proof that home producers need not be frightened by the importers. The consumer stampede away from beef in early April yielded much bigger price increases for UK farmers than for the New Zealanders. The mid-month price peak of over 200p per kilo liveweight on home-produced lambs was 40% higher than 12 months previously, whereas frozen carcase prices were about 25% better on the year.

Since then the positions have reversed, but the slide in the UK price over the past few weeks is mostly a predictable reaction to increasing numbers coming forward - though trouble in the French market is causing damage - whereas the present value of imported carcases, 40% stronger than in July last year, reflects the fact that the cupboard is bare.

``Our stocks are probably at the lowest level in living memory,'' said an official at the New Zealand Meat Producers' Board in London.

Traders believe there is little chance of the position changing later in the season. The New Zealanders brought forward some of their EU quota from the second half of the calendar year. This had already disappeared into consumption before the end of last month.

However, the new factor of most potential significance for home producers is the prospect of a dramatic change in confidence among New Zealand sheep farmers. Breeding stock numbers have fallen dramatically since radical, Thatcherite economic policies led to the abolition of most farm subsidies a decade ago.

Much former sheep-grazing land has been turned over to dairying, beef, deer, and even forestry. The export kill has fallen from around 36 million to about 23 million. Suddenly and at least partly due to the unexpected BSE-prompted surge in revenue from lamb sales in the UK market, there are signs of some producers planning to expand breeding flocks again.

Because New Zealand's sheepmeat production is far more seasonal than in the British industry, and average lambing percentages much lower, extra retentions of ewes and ewe lambs would have a much more abrupt and dramatic effect on the availability of stock for slaughterers than would producer reactions to a similar boost in this country.

``It looks as though we're going to be short of lamb, and short of mutton,'' lamented a senior executive at one of the biggest sheepmeat importing companies in London.

On his reckoning, frozen lamb supplies reaching the UK could be tight until 1998.