Premium price challenge for organic lamb

Obtaining a premium for organically produced lamb is a challenge that is repeatedly brought up in discussions regarding organic sheep enterprises. The scale of the challenge is only now truly being realised, with just 28% of organically produced lamb on average sold for a premium, and the remainder sold in conventional markets. Delving deeper into marketing shows that this is split unevenly across lowland and hill enterprises, with 31% of organically produced lowland lamb sold for a premium and just 20% of hill lamb.

The newest data on the sector has come to light in the first census of organic lamb producers commissioned by Bord Bia and completed by certified members of the Irish Organic Farmers and Growers Association (IOFGA) and the Organic Trust. The National Organic Sheep Census 2016, carried out in June and July, compiled data from producers who are certified with organic status and had at least one 2016 newborn organic lamb. This means that store-to-finished lamb producers and farmers in a stage of conversion from conventional to organic farming (takes two years) were excluded.

Number of producers

IOFGA and the Organic Trust circulated census applications to 447 producers registered as keepers of sheep. Of these, 53 producers did not reply while 87 were excluded from the dataset for reasons of not having sheep at the time of the census, having no newborn lambs in 2016, being in the conversion phase at that time or returning incomplete applications. This left 307 producers on which the census is based, generating valuable information and a starting point for a sector for which Bord Bia and industry stakeholders are hoping to develop a long-term plan.

The significance of achieving a long-term strategic marketing plan which increases the volume of organically produced lamb sold at a premium price is a step in the right direction and is now even more important, with more than 400 more producers signing up to the co-funded organic farming scheme under the rural Development Programme (RDP) in 2015, a significant percentage of whom are likely to be sheep producers competing for market share at some stage in 2017.

Flock size

When the census was completed in June and July, there was a total of 69,907 sheep, counting ewes present at that time and lambs born in 2016 across the 307 flocks, with a significant percentage of large flocks. From the total figure, 42% of flock owners accounted for 72% of the total flock, with 30% of flock owners possessing between 201 and 400 sheep and 12% in excess of 400 sheep. Thirty-five per cent of flock owners had between 101 and 201 sheep, while only 23% had fewer than 100 sheep.

Delving deeper into flock size, the total of 69,907 sheep can be split into 33,135 ewes and 36,772 lambs. This leaves an average flock size of 108 ewes per flock, while the census also looked at the median number (middle value of all ewes) and found it was 80 ewes.

Lowland versus hill breakdown

There are 239 lowland flocks and 68 hill flocks. Lowland flocks accounted for 71% of the total sheep, possessing 21,751 ewes and 27,827 lambs. The average flock size is 91 ewes, with the median value found to be 75 ewes. The number of sheep on hill farms is broken down as 11,364 ewes and 8,965 lambs, with the average number of ewes being 167 and the median 120. The average flock size on both lowland and hill farms is well above the national average. As shown in Figure 2, the dominant breed of ewe is similar to the profile of the national flock, with 23% Suffolk, 20% Texel and 17% Scottish Blackface ewes. Texel is the most common ewe type, followed by Charollais and Suffolk. A lambing date of 17 March to 30 April is most common as reflected in Figure 4.

Location of flocks and sheep

Cork has the highest number of ewes, with 4,180 across 19 flocks, marginally ahead of Galway, which has 4,052 organic ewes, spread across 22 flocks. Kerry is next closest with 3,707 ewes with a large gap to the next-highest county, Roscommon, which has 2,686 ewes but in smaller flocks and spread across 35 holdings. Leitrim and Westmeath are the only other counties with more than 2,000 ewes. While the counties listed above are all also near the top in regard to the number of ewes in the national flock, Donegal, the county with the highest number of ewes on a national basis, is down the organic pecking order and has 1,898 ewes across 19 flocks. Along with Cavan, the census shows these eight counties possessing over two-thirds of the total number of ewes and lambs on organic farms last June/July.

Commanding a premium price

As mentioned earlier, the census was commissioned as a starting point to try to develop a long-term strategy that will increase the volume of organic lambs produced commanding a premium. A significant challenge in achieving this is a high percentage of organic sheep located along the western seaboard, where the lowest demand is present.

Table 1 details the number of lambs born on farms by county in 2016. Just 29% and 11% of organically produced lamb in Cork and Galway secure a premium, with 30% in Kerry and 24% in Roscommon. Demand is highest in the east and southeast of the country due to the proximity of a factory and businesses active in sourcing organic lamb. Seventy-one per cent of lamb produced in Wicklow secures a premium price, followed by 66% in Dublin, although it should be noted that numbers traded here are small.

The volume of lamb sold from the western half of the country and achieving a premium could be increased by more processors or businesses starting to process organic lamb or marketing avenues being developed that would see higher numbers moving to Irish Country Meats in Camolin, which is currently the main market outlet.

Another factor contributing to a lower percentage of lambs in western counties securing a premium is a higher presence of hill lambs. As Figure 3 shows, 80% of hill lambs produced are sold conventionally, with most traded as stores. The breakdown of all lowland and hill lambs traded in marts and factories shows 58% traded between 37kg and 45kg liveweight, 26% over 45kg liveweight and 16% below 36kg.

Another big challenge for the sector is dealing with a very seasonal supply imbalance for the limited volume of lambs securing a premium.

Figure 5 shows the supply curve for organically produced lamb alongside the pattern of supply for conventional lamb. As can be seen, lamb supplies are confined to June to November. There are very small volumes produced outside this window, which is not surprising given the high cost of organic concentrates making it prohibitive to finish lambs economically.

The majority of store lambs sold as organic takes place in August and September, similar to the pattern for conventional lamb, but again large volumes are sold conventional due to cost as mentioned above. Finding a mechanism between producers and processors that makes it viable for farmers to finish lambs and generate a margin will be one of the greatest barriers faced.

Next steps and farmer-industry consultation

Declan Fennell, market specialist with Bord Bia is the man charged with bringing industry stakeholders and farmers together and commencing the process of developing a strategy that will increase the volume of organic lamb sold as such and securing a margin. He says “In terms of coordinating an export development plan for the Irish organic sheep sector a series of regional workshops have been organised for November. The purpose of these workshops will set out the census findings, the market opportunities and requirements and explore initiatives which will assist in building a critical mass of finished organic lambs for the export market. Representatives from IOFGA, the Organic Trust, certified organic processors, Teagasc, DAFM and Bord Bia will be in attendance. We are urging farmers to attend and collaborate as without farmer cooperation it will be impossible to develop a plan that will deliver tangible benefits for all members of the supply chain”.

Meetings take place as follows, with all starting at 8pm: