Irish sheepmeat exports are on target to achieve a significant increase in performance in 2020. According to Joe Burke, Bord Bia senior livestock manager, the value of sheepmeat exports could reach €350m for 2020 if they maintain their improved performance until the end of the year. This would represent a significant lift from the value of €315m recorded in 2019.

The value of Irish sheepmeat exports for the first eight months of the year is running 10% higher than the corresponding period in 2019. This is being underpinned by an increase in sales value, with volumes exported running marginally lower.

Speaking last Friday at the online EU Congress of Sheep Farming and Associated Traditions conference organised by Project Baa Baa, Burke said favourable trade dynamics in EU markets were providing the platform for improved performance. Imports of sheepmeat from New Zealand in the year to-date are running 16% lower, while exports from the UK to the EU are running 13% lower.

Lower New Zealand imports

Table 1 details the volume of imports into the EU for the first eight months of the year and compares these volumes to the corresponding period in 2019. The 17% reduction in imports is being driven primarily by a sharp drop in supply from New Zealand, with volumes falling by 16% or some 10,210t. If this trend of lower imports remains, it will be the lowest level of sheepmeat imported from New Zealand into the EU market since tariff-free quotas were established.

Two factors are contributing to the sharp drop in New Zealand supplies. The country’s sheep flock continues to decline, with adverse weather events also curtailing output while on the markets front New Zealand is targeting the Chinese and US markets with higher volumes of sheepmeat.

Similar factors are curtailing Australian lamb exports. New Zealand has managed to maintain its export volumes in the region of 300,000t up to the end of August, partly due to sacrificing its retention of ewe lambs. It is a different story in Australia, with exports to the global market falling by over 40,000t up to the end of August and recorded at a similar level to New Zealand at just over 300,000t as reflected in Figure 1.

To put the scale of this reduction in context, Ireland’s export volumes for the first eight months of the year stand at about 48,000t. Australia does not enjoy access to the same tariff-free quotas as New Zealand and this is the reason for the low import volumes. Figure 2 details the main players on the global market in terms of imports and shows how demand from China and Hong Kong has recovered quickly despite the coronavirus pandemic hitting markets hard earlier in the year.

Lower EU output

In addition to lower volumes of sheepmeat entering the EU market, production was also lower in a number of significant players trading sheepmeat internally in the EU. This is reflected in Figure 3, which shows the volume of lamb produced and the change on 2019 levels.

All of these factors combined provided an ideal opportunity for Irish exports to secure a stronger trading position and command a greater share of exports into high-value EU markets. Sheepmeat sales across Europe have generally performed well despite the COVID-19 pandemic, with the closure of food service outlets having less of an effect than with beef, for example.

Domestic sales in the Irish market have also benefited from consumers having more time for cooking, with year-to-date sales running about 10% higher. This is also contributing to static exports to EU markets, despite production for the early part of the year running 4% to 5% higher.

Servicing retail demand

Processors report that a major benefit in servicing a higher retail demand and a lively carcase trade in recent months is lambs presented at appropriate carcase weights. For long periods during the summer, carcase weights were running anywhere from 0.5kg to 1kg lower than recent years. This provided greater opportunities to target lambs at either the carcase or primal trade or for further processing for the retail market. The volume of sheepmeat traded under the category ‘chilled sides’ in the period January to August increased by 3,083t or 24% to reach 15,603t. This is despite export volumes reducing.

Processors are concerned at signs of the average carcase weights of lambs increasing in the last week to 10 days. The concerns relate to the fact that while retail demand is solid, there is an imbalance in the market due to a massive reduction in demand in the food service sector. In the past some heavier cuts or carcases could be diverted to this market. This outlet is practically closed at present and will remain this way while lockdown restrictions remain in place. As such, factories are encouraging producers to draft lambs promptly and to adhere to carcase weight limits of 22kg.

Unwanted pregnancies

Another issue that has cropped up looking at long-term market prospects is ewe lambs presented in-lamb for processing. This is not typically an issue until March-April but it is actions taken now that will prevent it from occurring.