Bumpy ride continues

By Peter young

The summer months always see downward pressure on lambs prices. There was a steady decline throughout the summer last year to 352c/kg at the end of July (see graph). While last year could be described as a slippery slope, farmers are suffering much more bumpy ride this time round. The peaks of 2003 lamb price were never reached but they have already suffered two freefalls, that knocked over €7 a head off their lambs over night.

Farmers that did deals late last week got up to 392c/kg on Monday but prices quickly fell after that. The sudden fall of over 30c/kg is not fully reflected in the graph as factories dropped their base quotes to as low as 364c/kg for today (Thursday). This level was not reached until the 23 July last year. Farmers should at the very least draft tighter in the next few weeks. Most groups are getting paid up to 21kg although one group I talked to are now being paid up to 22.5kg.

France

France and in particular the French buyers are being blamed again for the recent falls. Bord Bia report that the promotions, which continue to fly the Irish flag, are helping. French buyers are using the arrival of large volumes of UK lamb to pull down prices. In France grade one Irish lambs are making 419 to 430c/kg incl. VAT but the buyers still say they are getting UK lamb for less. Grade 2 lambs are being discounted but most factories are keeping them on the Irish market, cutting up the heavier carcases. At this stage 20-30% of lamb is sold onto the Irish market. It's remained steady so should help buffer some of the French falls.

UK

The domestic market has helped UK prices so far this year. As larger number have come out prices have suffered. The SQQ liveprice fell to 114p/kg (equivalent to 385c/kg) while farmer were paid 240pstg/kg deadweight or 381c/kg incl. VAT, still more than Irish prices.

IFA National Sheep Committee Chairman Laurence Fallon said a high price gap of €12 per lamb between the market return in France and the price paid to Irish farmers is far too much. "Based on the French market returns factories could pay farmers a price of €4/kg." He said the excessive price cuts by the factories in the last week cannot be justified and farmers should strongly resist the factory price cuts".

He said lamb supplies are not excessive and prices in the UK are 15c - 20c/kg above Irish levels.

Gabriel Gilmartin vice chairman, ICSA sheep committee said that allowing for reduced skin prices there is room for Irish factories to pay at least €4/kg."

He said that the Irish factory strategy of pulling lamb price is extremely short sighted and will only lead to a mass exodus from the industry.

He called on the factories to either own up to profiteering on the backs of their suppliers, or own up to inefficiencies within their operating costs and overheads.

Ewe prices have held with most factories quoting 126c/kg but up to 140c/kg was paid for quality lots last week.

One thing is clear that if the bumpy ride continues more farmers will opt off the rollercoaster sheep trade in the future.