Sheep throughput in 2017 increased by a massive 277,088 head to reach 2.94m, the largest kill for a decade. The lift in throughput stemmed from 125,537 extra hoggets processed(+18%) , over 100,000 extra lambs (+5%) and 50,747 more ewes and rams.

The additional numbers in the system increased the total volume of sheepmeat produced in 2017 to 67,000t, a rise of 6,050t on 2016.

The increased availability of sheepmeat also underpinned a sharp rise in exports. At last Friday’s Bord Bia meat market seminar, market specialist Declan Fennell showed sheepmeat exports rising 14% to reach 57,000t.

While the greater volumes exported boosted the value of sheepmeat exports to €274m, an increase of 12%, it did not come without its challenges.

Farmgate prices for the first five months of 2017 fell by 37c/kg to €4.81/kg, with markets struggling to handle greater volumes and match 2016 returns.

Producer prices for the period from May to December were boosted by tighter supplies, lower volumes of sheepmeat (lighter carcase weights) and solid market demand, with returns averaging €4.84/kg, a jump of 23c/kg on the same period in 2016.

However, the price increase was not capable of compensating for lower prices in the first five months of the year, with the yearly average at €4.77/kg, a drop of 5c/kg.

Export markets

Figure 1 details the main export markets for Irish sheepmeat in 2017, the volumes exported there and the change on 2016 volumes.

Declan said: “The market diversification evident over recent years was largely maintained, with over 45% of shipments destined for markets other than France and the UK in 2017.

“Sweden continues to perform well and is now ranked our third most important export market, closely followed by Germany, which, along with Belgium, continues to provide high-value outlets.”

Other notable increases from a lower base were a 67% increase in exports to Switzerland and a 45% increase to Italy, while Hong Kong secured massive growth from a very low level. This gives a flavour of the potential of Asian markets if regular channels of trade can be secured.

Canada was also highlighted by Declan as an important growth market, while, closer to home, he highlighted better than anticipated trade with the UK.

“There was an 8% increase in exports to the UK despite the challenges of a weak pound and sterling fluctuation. A contributor to this positive performance was a 24% decrease in UK mutton imports from New Zealand, with Ireland capitalising and filling some of the shortfall.”

The festival of Eid al-Adha continues to represent the busiest trading period and again accounted for the largest kill of the year at 72,900 head.

Eighty-one per cent of the country’s 35,349 sheep exported live were also destined for the festival. This was a reduction of 26% in live exports, with Declan highlighting tighter supplies and higher Irish prices as limiting the competitiveness of exporters in key markets.

The volume of sheepmeat exported for Ramadan has been lower in recent years, but it still remains capable of giving a boost to demand. Declan pointed out that for the years 2019 to 2024, the festivals of Easter and Ramadan will only be separated by a two-week period.

“The timing of these religious festivals plays an important role in the planning schedule for exporters. There are opportunities for the sector in satisfying higher demand early in the year, but this could also present a significant challenge, with supplies generally tighter as hoggets are phased out and fewer producers are lambing early.”

Big kills to continue

Looking at market prospects for 2018, Declan predicts that hogget throughput will remain on par with 2017 levels. However, of greater concern is a large carryover of hoggets in the UK.

“DEFRA published its final June census results before Christmas. This showed an extra 500,000 lambs present on 1 June. Add in that there were 547,000, or 7.8%, fewer sheep processed in the period June to November and it means that there could potentially be an extra 1m sheep to come on to the market before May 2018.

“It is not a reason to panic though, as the UK market can absorb higher domestic supplies, with less and less New Zealand sheepmeat being exported to the UK.”

Trade negotiations

End-of-year figures for 2017 show New Zealand filling just 148,254t, or 63%, of its annual tariff-free quota of 224,254t. While there is a large shortfall in exports, Declan says that New Zealand is not likely to want to give up any of its quota.

“New Zealand’s annual quota was one of the biggest talking points of 2017 and I have no doubt that this will continue for 2018 and beyond.

“The European market is New Zealand’s highest-priced market and the way in which their quota will be split on the UK leaving the EU is playing heavy on their minds.

“It is not until Brexit negotiations are concluded that this matter can be dealt with via the WTO process of trade deals.”

The consequences of how any trade deals could affect the 13,000t-odd of Irish sheepmeat being exported to the UK and the continued passage of about 400,000 sheep exported live for direct slaughter from Northern Ireland to southern plants will also be closely followed.

Looking at where New Zealand’s sheepmeat is now being exported again reinforces the importance of gaining access for Irish exports to the Chinese market.

New Zealand has been operating on a zero-rate tariff with China since January 2016 and exported some 119,144t of sheepmeat to the market in 2017. This was helped by a six-month pilot scheme of chilled shipments in 2017.

A free-trade agreement with Malaysia since 2010 is also reaping rewards, with 16,235t exported there in 2017.

Declan also gave a breakdown of the Australian export market in addressing potential export destinations for Irish sheepmeat.

Continuing to gain access to more markets is especially important in the context of the national flock increasing by 36% since 2010 and higher output likely to become a feature of the trade, with Declan predicting a further 2% increase in 2018.

While Australia has a much lower EU free-tariff rate quota of 19,186t, it has been successful in securing more zero-rate agreements and is a country to watch given its breeding flock is forecast to rise 4% to 39m head.

Its continued change in focus from wool to meat production is also helping to grow output.

Its main market is the US, with a tariff-free quota of 68,500t, while another two of its important markets, the UAE with exports of 28,711t in 2017 and Canada which accounted for 8,470t, are also on Ireland’s list of target markets to develop since securing market access in recent years.

Gaining real traction on these markets in 2018 is important to give an alternative outlet and also reduce the effects of any negative Brexit trade deal that would reduce exports to the UK.