European sheep farmer organisations have expressed dismay that a Sheep Technology Centre of Excellence in Uruguay is to be funded by the European Commission under a scheme of development grants to the South American country.

France and the UK, especially, have articulated concerns over the centre, which, it is understood, will provide "training, technical assistance, highly innovative products and services focused on the sheep industry to increase competitiveness" to Uruguayan farmers.

Farmer organisations in both countries have said this has the potential to directly impact lamb producers in Europe.

John Lynskey, Sheep Chairman of the Irish Farmers Association, says that currently Uruguayan lamb exports do not present a threat in terms of comparative quality with Irish products, but acknowledged this could change in the future once the centre is built.

"We will be watching it closely to see exactly what investments they'll be making and how much they'll be putting toward it," he told the Irish Farmers Journal.

The European Commission, which is responsible for the bilateral development aid, earmarked €31 million for Uruguay for the period 2007-2013. A total of €18.5 million of this amount was to go towards the “social and territorial cohesion” of the country and €12.5 million was to go to “innovation, research and economic development”.

An unspecified amount of this money will go towards the new centre.

The National Farmers Union (NFU) in Britain says using EU money to help fund research to drive innovation in the South American sheep sector is “absolutely unacceptable”.

In a statement, NFU livestock board chairman Charles Sercombe said the Uruguayan sheep sector is already well developed. "This is not a case of aiding a disadvantaged nation and I am personally staggered that during a time of low prices and poor returns for European producers, the EU has taken the decision to spend Member States’ money on making a serious competitor more profitable."

Earlier this month, AHDB Beef and Lamb hosted a delegation of French producers and their trade organisation Interbev at a meeting of the Sheep Club, where both nations expressed their dismay at the move.

However, according to the Sunday Express, a spokesman for the European Commission, which was responsible for the payments, said that it was the South American country's government which chose to use the development money to build a new farming centre. He said, "EU bilateral development aid for Uruguay is being ended. There has never been any direct funding allocated by the EU to the Centro Tecnologico Ovino. Earlier general support for innovation in Uruguay was agreed by EU Member States but has been discontinued."

There are no plans in the EU's next budget, stretching from 2014-2020, to send any more development grants to Uruguay.