Sheep farmers need to focus on margins rather than on improved prices being paid for spring lamb, industry figures said at the Irish Cattle and Sheep Farmers’ Association National Sheep Conference in Carlow yesterday.
ICSA president Gabriel Gilmartin cautioned that rising costs of fuel, land rental, seed and fertiliser mean that sheep farmers need to receive at least €7/kg for spring lamb, with €5.50/kg for summer lamb. Anything less could undermine the present recovery, the sector’s strongest performance since the early 1990s.
"The future is bright for the Irish sheep sector," Mr Gilmartin said. "2011 was a very strong year with prices never too far from €5/kg but one good year does not mean that all is secure for sheep farmers. We need a number of positive years to help stem the outflow as well as offsetting the rapid escalation of input costs.
"When I started out in 1982, land was costing about €40/acre to rent and lambs were selling at €80. In 2011, lambs averaged a €100 but rental ground is going to cost €150 in 2012.
"Therefore, we need to drive on with lamb price. What should it be? Well, there is a lot of cost for the early producers who need exceptional prices to cover the huge costs and work associated with sponging, and lambing when many people are still digesting the Christmas excesses. These farmers need to be beating €7/kg by a comfortable stretch if it’s to be worthwhile."
Bob Cahill of meat processors Kepak, Hacketstown, Co Carlow, said that the markets for lamb were heading into a period of turbulence, and that the six-to-eight-week prices were coming under pressure in France.
He also said that the home market prices varied from one part of the lamb to another. He said the outlook for spring was positive.
"Spring lamb could be around €6/kg at Easter," said Mr Cahill. "The long-term view is that slaughtering will be up 3%-4% for 2012; it is currently up by around 10%. We view the markets as being around the same as last year, and don’t anticipate any major shift in the markets during 2012."
Guest speaker Phil Stocker, chief executive of the UK National Sheep Association, echoed Mr Gilmartin’s views on rising input costs, noting that the 10-15% price gained by farmers has been largely offset by increased costs.
He said that sales of British lamb to France, China and the Middle East are all rising, but added that British farmers are also working to produce sheep with lower levels of fat to meet consumer preferences, conscious that the domestic market would be of strategic importance if exports were threatened by a crisis.
Mr Stocker said: "We are constantly telling people that the focus needs to be on margin and on making a profit. In the UK, the producers are constantly talking with the processors and retailers to ensure everyone gets a fair deal.
"The retailers are concerned about shortages next year and wondering where their supplies are going to come from, so they are talking to us about that. Our exports are performing very well. For the next year or two, we cannot see anything that will upset the market. No huge expansions have followed the increase in price in either the UK or New Zealand."
Mr Gilmartin conceded that meat processors may resist higher prices, especially in Britain, where consumption fell 20% in 2011, largely due to hard-pressed consumers opting for chicken and other cheaper meats. However, as Mr Stocker suggested, this consumer trend could well prove to be a localised phenomenon.
Irish sheep exports reached 41,000 tons in 2011, and the ICSA is predicting a further 2%-3% rise during 2012.
Irish exports to Britain and France were down 7% during 2011, but the newer markets of Germany, Sweden and Belgium were all up 30%.
Meanwhile, ICSA general secretary Eddie Punch explained that the lack of new entrant farmers into the sheep sector — despite the solid price being paid for lamb this year — can be explained by onlookers having witnessed a decade of hard times in the sector.
"One good year does not an industry make," said Mr Punch. "We have had 10 very hard years in sheep farming. The sector can yet be hit be a lot of unknowns such as currency fluctuation, and by ‘known unknowns’ such as the downturn in European consumer spending.
a d v e r t i s e m e n t
This appeared in the printed version of the Irish Examiner Tuesday, February 14, 2012
