4 key factors having an impact on the sheepmeat trade

There are four key factors that are impacting the sheepmeat trade at the moment, according to a Senior Executive at Meat Industry Ireland (MII).

Cormac Healy was speaking following a meeting between the between the IFA and MII, including representatives of the major sheepmeat processors, which took place on Wednesday February 8.

While clearly there is disappointment with the current price levels compared with the last number of years, processors are faced with a very challenging marketplace at the moment, Healy said.

Trading conditions are exacerbated by a marked increase in the number of very heavy lambs coming through at present, he added.

Processors have delivered improved prices over the last number of years but at present a number of factors are putting a major drag on market returns and these were discussed at the meeting.

The four key factors currently influencing the trade, according to Healy, include:

1. Heavy Lambs

The excessive number of very heavy lambs coming out at present is depressing the return achievable in the market.

Legs and other cuts from these carcasses are simply outside market specifications and customers do not want them, the MMI Senior Executive said.

2. Fall in Returns

The fall in returns from the fifth quarter that we have seen throughout 2016 means that this contribution is back on this time last year, he said.

3. British lambs trading at lower prices

British lambs have been trading at a lower price than Irish lambs for some time which makes them very competitive in export markets.

“While the British price has recovered somewhat in recent weeks, the weaker Sterling still makes them very competitive in the marketplace.

“Sterling is 13% weaker than this time last year.”

4. Strong domestic supply in the French market

The French market is also seeing strong domestic supply of Lacaune lambs, in greater numbers and earlier than previous years, he added.

‘Critical that lambs are moved when market fit’

The industry is doing everything possible to deliver as strong a price as possible based on the prevailing market conditions being faced at the moment, Healy said.

“It remains critical that lambs are moved when market fit to avoid a build-up of even heavier lambs in the coming weeks that will only add to problems.

“For the year ahead, as regards new season lamb, processors were keen to stress the importance of marketing lamb as soon as fit, in order to avail of early market opportunities.

“In this context, it was noted that Ramadan takes place earlier this year,” he said.

Farmers frustrated with the ‘loss-making prices’ on offer

Hogget finishers are extremely frustrated with the loss-making prices on offer from the meat plants, IFA President, Joe Healy, has said.

These prices are down 65c/kg or €15/head on this time last year, while in some instances with weight cuts, the losses are as high as €20/lamb, he added.

Healy was speaking following the meeting, where he said a National Sheep Committee delegation from the IFA told the factories that poor prices along with unfair weight limit cuts, on top of clipping charges, had eroded confidence in the sheep sector.

The IFA President called on the factories to come out and offer a viable price for in-spec quality lambs.

If the factories want in-spec quality lambs, let them offer a viable price for them and farmers will move them earlier and at lighter weights.

Meanwhile, IFA National Sheep Chairman John Lynskey believes factories need to adopt a more responsible and longer term approach to ensure the continued supply of quality assured lamb out of season.

This is in the factories own interests, so they can meet their retail requirements on a full year-round basis and reduce their dependence on imports, he said.

During the meeting it was made very clear to lamb factories that farmers would take a very dim view of any imports, either live or in carcass form from outside the island, being used to push back the market, Lynskey said.