Ireland bucked the trend in Europe last year to record an increase in lamb consumption.
James Murphy, the IFA sheep committee chairman, maintained that consumption on the domestic market may have risen by as much as 5pc over the past year.
This result runs counter to trends in other EU member states, where lamb sales have fallen steadily in recent years.
Consumption of lamb in Britain fell by more than 15pc last year, while the market in France stayed under pressure.
Mr Murphy said sales of lamb on the home market this Christmas had been particularly strong, with a decidedly "festive" feel to the trade.
He said Bord Bia, lamb processors and the IFA had all worked hard at addressing the issue of falling consumption, and the lift in sales last year was a testament to those efforts.
However, Mr Murphy warned that the solution to falling sheep meat consumption across Europe could not be cheaper lamb.
He said lamb prices would have to be maintained at last year's levels if the recovery in the sheep sector was to be maintained.
While Mr Murphy accepted that last year had been a good one for sheep farmers, he insisted that returns to lamb producers had to hold.
"The recovery in the Irish sheep sector will be all about price. We need 2011 prices to hold if the recovery that we saw in sheep numbers inthis year is to be built on," Mr Murphy said.
A recent meeting of the Food Harvest 2020 sheep implementation group targeted a 30pc lift in ewe numbers over the next eight years.
This would take the ewe flock from the current level of 2.2m head to 3m head and would result in the lamb throughput in slaughter plants going to 3.5m head.
Meanwhile, Mr Murphy said the outlook for lamb prices over the coming year was positive.
"It is all about supply and demand. Supplies in Europe will match demand or be a little bit shy of it," Mr Murphy predicted.
He pointed out that this shortfall was unlikely to be made up by New Zealand lamb, due to increased demand for southern hemisphere produce in the Middle East and China.
Mr Murphy added that New Zealand farmers had grown to like the higher prices available at the moment and they were unlikely to risk a price fall by increasing supplies.
"New Zealand will have a big influence on European lamb prices. But they didn't fill their EU import quota last year and hopefully they won't do it this year either," he said.