Processor Irish Country Meats has said it is sympathetic to sheep producers regarding the additional cost of production on farms, but any lift in the trade doesn’t look likely until March when Ramadan and Easter come around, with February looking flat.

Irish Country Meats (ICM) general manager James Smyth addressed attendees at the Irish Farmers’ Association (IFA) national sheep meeting at the Radisson Blu Hotel in Athlone on Monday (January 23).

Smyth said: “It is challenging times and it is appropriate for me to acknowledge the additional cost of production producers have and are facing.

“We are sympathetic to that and indeed it’s fair to say right across the business and at consumer level, there is no household or business that isn’t very much affected by the current increase in costs.

“2022 was the highest sheep kill in six years which was a good result from our perspective and allows us market a decent critical mass of product you are producing across the world.

“From a price perspective, 2022 was up on 2021, but listening to other speakers here it looks as though the store seller was the one to suffer in 2022,” he added.

Smyth acknowledged that store finishers are under pressure at the moment but referenced key dates coming up in March such as Ramadan and Easter, and said he was optimistic about an uplift.

“We did predict and we were concerned that January above all years was going to be difficult to trade in,” he said.

“From a lamb perspective, it isn’t unusual for January as there is big spend coming up to Christmas and lamb is a protein of choice in some of our premium markets leading up to Christmas for Christmas dinners and indeed throughout the year.

“Which is why were concerned for January and thankfully we are nearly at the end of the month,” he added.

James Smyth of ICM *speaking at the IFA National Sheep Meeting*

Smyth said that there has been some slight improvement in the trade but stressed that the marketplace is still difficult and is going to continue to be difficult.

“But we will, as we have done in the last three years, which have been decent years for all concerned, endeavour to continue to market your product into the markets that we can get most financial gain from,” he continued.

“I think history will say that over the last three years, as an industry, it has delivered to the farmgate in that regard where the market has allowed.

“When you look at the January prices which is why we are all here and why we are all concerned, the 7% reduction in prices at a particularly high-cost time of year is difficult for all concerned and we are very conscious about trying to do our bit to minimise the effect on farms.

“But the market is the market, and pretty much right across the various countries there is a 7-15% reduction in livestock prices, with the UK prices back 14-15% which makes the marketplace more difficult to trade in as we go toe-to-toe competing with them.”

Advice

Giving some advice to farmers going forward, Smyth advised not to hold onto hoggets over 23kg.

He said: “The reason for this is obviously the cost of inputs. It’s costing you €5-6/head/week, I don’t think that’s sustainable.

“On the lower end of the scale, there is about 10% of sheep that are under 16-17kg carcass weight and underfleshed which is a problem in itself. On the other end of the scale there is about 30% of sheep overweight.

“So that is challenge for us and it isn’t sustainable, if I may say so, for you, the producer.”

Markets

In terms of markets for Irish lamb and the growth in value of Irish sheepmeat, Smyth said: “In 2015, the Irish sheep industry value was €250-300 million so we have become more important to the broader Irish economy.

“For many years it was static at €250-300 million but thankfully we are now up at €475 million so we are more relevant in an Irish economy perspective which is positive.

“In terms of growth, there was growth in France, Germany, Sweden and good progress being made in Switzerland and Canada.

“However, the one challenge in some of these countries is one the cost of transport to get there and some of the companies that we are dealing with in these markets have cold storage issues and have high stock levels.

“There is also high stock levels in the US as well so that’s a difficulty we have encountered in the last quarter,” he explained to the meeting.

The ICM representative said this had an impact on prices at the start of the year.

“The kill has been strong in the first couple of weeks in January and with the market being that bit more difficult with the last week in January always being difficult, so that will flatten over the coming weeks,” he continued.

“We will then have Ramadan and Easter in March which will hopefully help to take away a decent volume of lamb and we look forward to that.”

China

Smyth touched on the Chinese market and the importance it plays on the global sheepmeat trade, accounting for 40% of total sheepmeat traded worldwide and the future challenges.

He said: “When demand fell by 18% in China you can only imagine the pressure it put on the rest of the world because the volume, particularly legs of lamb coming from New Zealand over the last number of weeks, is off the Richter scale.

“The price differential is substantial with the New Zealand price just over €4.00/kg and it has a quota into the EU of 114,000t and the same to the UK, so it leaves a very difficult place to trade in at the moment.

“There lies the challenge and whether or not New Zealand is going to make a big impression on that quota unlike previous seasons,” he added.

“The US consumption is at 165,00t, 97% of which is procured from New Zealand, so hopefully once China gets up and running again and the US, you’d like to think you would see some improvement in the weeks and months ahead.”

Smyth said that sterling was 5% stronger in 2022 than in 2023 so far, which is another factor making the UK more competitive against Irish produce in the French market.

“But look, we have faced these kind of challenges before and come though it and we will do so again, but there are challenges ahead in 2023,” he concluded.

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