No recovery forecast in light lamb markets

There is unlikely to be any return in the immediate future of traditional light lamb markets for hill lambs. This was the view of Kildare Chilling’s Seamus Finucane, who was presenting an update on current and future market prospects at last week’s IFA hill sheep forum.

Kildare Chilling currently purchases lambs from the Connemara region through the Mayo Blackface Group and Seamus says the focus in the linkup in recent years has been on delivery of a heavier carcase weighing in excess of 15kg.

“There are some market outlets for lambs over 15kg, but there are very few outlets for carcases under this weight that will give an economical return for us or the farmer. The future of hill lamb has to be a universal lamb – by this I mean it will have to be capable of suiting a number of markets. We need a hill lamb capable of delivering a carcase of at least 15kg and preferably 17kg. We can possibly handle some 14kg carcases at certain times of the year, but not significant volumes.”

Seamus explained that the development of markets for carcases weighing between 15kg and 17kg has come about by diversification from the traditional light lamb markets of Spain, Portugal and Italy, which are now largely satisfied by domestic supply.

Bord Bia’s Declan Fennell presented data that showed Spain transforming from a significant importer of sheepmeat to now exporting significant quantities of lamb. Spain’s main market outlet is the live export of lambs to north African markets, but the country is now also a significant exporter of lamb on to the EU market, competing in many of the same markets as Ireland.

New markets

Some hill lamb producers in attendance said that it is not possible to bring hill lambs to the carcase weights desired in harder mountains and hills where there is no better-quality grassland grazing present. They challenged Seamus Finucane and Declan Fennell that there must be markets available for carcases between 12kg and 15kg.

Both speakers said that while there may be some limited markets available for carcases of this weight, the return that the market is willing to pay is extremely poor and is not a viable option.

“We tried the Spanish trade, but as well as the market being under pressure in recent years, the type of light lamb we get from the hill is too dark to challenge the lighter-coloured carcase Spanish processors get from intensively finished milk lamb.

“If we are going to compete at 12kg to 13kg carcase weight, then we need consistency and a year-round product which isn’t available at present.”

On potential new markets, Seamus said: “We have been exploring all market avenues in recent years. For example, we were achieving some positives a few years back in exporting carcases weighing 15kg to 17kg to the Tunisian market to meet growing demand from tourism. Tunisia accounted for 5% of our exports in 2013 and again in 2014, but unfortunately it didn’t last with the Tunisian beach resort attack in 2015, which reduced tourism-related demand and ceasing our exports.”

In contrast, the Scandinavian market is generating some positives. “We have been working hard on developing trade within the EU and trying to secure access to some higher value markets,” he said.

“Ireland has benefitted in general by lower volumes of New Zealand sheepmeat in the market in recent years and Scandinavia is one such market that we are developing niche markets for this universal lamb. We have increased throughput here, but the importance of having the right type of lamb is crucial, with demand for carcases over 15kg.”

Commenting on a preference for wether lambs or rams, Seamus says that it is not a one-answer-fits-all approach. He says that for the supermarket business, the preference is generally wether lambs, while, at certain times, growing demand around Muslim festivals in particular is for ram lambs.

However, Seamus is keen to reinforce that the finish of lambs is generally more important than if a lamb is finished as a wether or a ram.

“There are problems with under-finished lambs no matter what the type of lamb, but these are greatest with ram lambs.

“They deliver a bad taste and skinny ram lambs present lots of problems for presentation and marketing. Management is also crucial here and ram lambs should be separated from ewe lambs for finishing.”

Fifth-quarter positives

Looking at wider market forecasts, Seamus says that Muslim festivals are becoming an important component of the trade with an ability to boost market demand.

However, the fact that festivals move forward by 10 days each year will create some challenges in the near future, with demand possibly coinciding with peak Easter demand when supplies are already usually at a lower level. This in turn could also leave the latter half of the year more challenging to move large volumes of sheepmeat.

Fifth-quarter markets are showing signs of improving, with the price of skins likely to increase in 2017. The value of casings had been on the floor in 2016 and is also showing signs of improving.

A sharp falloff in Australian production, as a result of drought, could also increase demand. This, along with higher volumes of sheepmeat moving into China from New Zealand, could create demand in other areas Ireland is operating in. Creating market access is also viewed as critical.

“I would like to see Ireland becoming the New Zealand of the northern hemisphere in terms of having wider market access,” said Seamus.

Changing markets

A switch in processing behaviour from carcase to value-added through boning out carcases is delivering in establishing new markets. Switzerland was highlighted as one example of a high-value market capable of returning higher prices for specific cuts.

Seamus also sees potential in markets outside the EU, with Canada raised as a market that is likely to build on the volume of 356t of sheepmeat exported there in 2016. Growing exports to Canada is also seen as positive in establishing trade routes to the US. However, to make this happen, Seamus says a number of aspects first need addressing.

Full EID tagging is singled out as being critical, not only for demonstrating maximum traceability but also to keep in line with what competitors like the UK can offer. Quality assurance and a clean livestock policy were other areas raised.

“Quality assurance is needed for me in opening every door. Currently, 63% of lamb is quality assured and I’d like that to be 100%.

“Cleanliness of sheep is something that is becoming more and more important. To pass stringent veterinary inspection and gain market access, we must have zero contamination.

“I do believe that at certain times lambs will have to be belly-shorn and dagged. We have invested substantially in a shearing room, but I would prefer not to be shearing as it adds more cost and could devalue product. A clean livestock policy is coming in June and it is something farmers and processors are all going to have to back.”

The last issue raised was that of overweight carcases. This spring, Kildare Chilling is running at about 70% of lambs needing to be boned out due to overweight carcases.

Seamus says that this left significantly more sheepmeat on the market, which added to already higher throughput. He is urging producers to weigh lambs more often and to market at the correct weight.

“If you can return a better product, it will put more money in your pocket and be better for us to market your produce as good as we can,” he said.