Farm Ireland

Wednesday 21 February 2018

Scarcity boosting sheep prices but it is no long-term solution

John Shirley

Some years ago, I discussed world sheep prices with some New Zealanders. I glibly suggested that the best way to lift New Zealand and world sheep price was to sink a couple of the boatloads of New Zealand lamb en route to Europe. The resultant shortfall of lamb on the EU market would have lifted prices for both European and New Zealand sheep producers.

A significant shortfall in delivery of New Zealand sheepmeat into the EU eventually happened in 2010/2011. It has helped deliver a massive boost to lamb prices in both Ireland and in New Zealand.

Happily, the shortfall did not result from sinking ships. It came from lower NZ production and from competing markets taking the Kiwi sheepmeat away from the EU.

Another positive outcome from this is that the penny is beginning to drop in New Zealand concerning the laws of supply and demand. After 40 years of slavishly striving to fill their EU quota, a Kiwi farm leader recently remarked: "Maybe not delivering on our full 228,000t EU quota can be a good thing."

The good Irish sheep trade of the past two years has been driven purely by scarcity. Sheep numbers have crashed everywhere. In Ireland, they are down from 4.6m to 2.6m ewes, in Britain from 18m to 13.8m ewes and, possibly most dramatically, in New Zealand from 70m to just 34m sheep.

But depending on ever-shrinking production to support farm prices is not a long-term recipe for viable sheep industry.

Consumption, too, is under pressure. Promotional support helped minimise consumption drops in Ireland and France but the British supermarkets stood back and let sheepmeat consumption collapse last year by 20pc.

In 2011, new customers for Irish lamb opened up in Sweden, Belgium and Germany. These came directly from the shortfall of New Zealand lamb. It's a mirror image of the gaps being made for Irish beef in the EU due to the absence of Argentine product.

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These, and other issues, were discussed at an interesting ICSA sheep conference held last week in Leighlinbridge, Co Carlow.

Bord Bia's new sheep specialist Declan Fennell told the conference that the exodus from the sheep industry in Ireland has stopped and he predicted a recovery in this year's flock.

Phil Stocker, the new chief executive of Britain's National Sheep Association, said that in Britain there was also a small recovery in their breeding flock. French production looks set for a continued decline, despite their €21 per ewe subsidy. How will New Zealand sheep farmers react to the 40pc price lift? Will the decline in sheep numbers be reversed or will dairy expansion continue to squeeze out sheep farming? The experts predict only a modest recovery in New Zealand sheep numbers.

In Ireland, 30pc of our sheepmeat is consumed by the home market. Master butcher Laz Murphy, based in Tullow, described how he has maintained lamb sales by having consistent quality and how his business has dealt with the same farm family suppliers for three generations. "Our older customers are loyal to lamb but I urge Bord Bia to target younger consumers with their lamb promotions." He suggested that quick recipes such as stir fries are needed to get young people eating lamb.

Across the globe the growing Muslim market is a major factor in sheepmeat consumption. Bob Cahill, site manager for Kepak Hacketstown, told the meeting that worldwide sheep consumption is expected to grow by 6pc over the coming decade.

Kepak is developing new markets for both sheepmeat and offal. They are recovering lamb heads for new customers in Tunisia, China and Sweden.

There was all-round agreement at the ICSA meeting that lamb should be positioned as a premium product, but this would demand high, all-round standards. Declan Fennell said that only 45pc of our lamb kill was quality assured compared to almost 80pc of our beef. We must avoid over-fat carcasses and all ram lambs should be castrated from August on.

Nevertheless, sheep farmers came away from the meeting in positive mood. Compared to the past couple of decades, sheep prices are up, wool is up and we also have the new grass premium. Long may this state of affairs continue.

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