When we think of Irish beef and lamb exports, the UK is the main destination for beef, and while it is a strong market for lamb, France is the country historically most associated with Irish lamb exports. With the UK market surrounded in uncertainty because of Brexit and falling lamb sales to France, development of alternative markets is a priority.
Belgium is currently an 8,000t annual beef market, according to Bord Bia, which makes it Ireland’s eighth most important beef export mark.
Approximately 4,000t of Irish sheepmeat is exported to Belgium annually, making it the fourth most important export market after France, Britain and Germany. This has been a consistently growing market since 2010 when our annual exports of sheepmeat were less than a third of 2018 levels.
Belgium is half the size of Ireland in terms of area but has double our population at 11 million people. It also has a strong agricultural sector with 2.5m cattle and 6.2m pigs in 2016 (Eurostat).
Slaughter data supplied by Statbel, the Belgian statistics agency, reported 920,000 cattle were slaughtered in 2017, which produced 282,000t carcase weight of beef, and just under 11m pigs were slaughtered, producing 1,040t of pigmeat carcase weight. That makes Belgium the eighth largest producer in the EU for both beef and pigmeat.
On dairy, Belgium produced 3,895m tonnes of milk in 2016 (Eurostat), which equals 3,781m litres. Belgium produces approximately one third as much milk as the island of Ireland does (10m litres) and approximately 40% of the cattle that are processed between Northern Ireland and the Republic of Ireland.
Belgium residents consumed approximately 120,000t of beef in 2017 – just 40% of the 282,000t produced in the country. Belgium also imported 72,000t in 2017 (source: Bord Bia), which means it exported 234,000t of beef. This reflects the fact that Belgium is a high-value market which imported high-value steak meat cuts and exported the higher volume manufacturing beef from its own domestic production. Bord Bia estimates that 90% of Irish beef exports to Belgium go into the catering sector, with a relatively small share of the retail market.
On dairy, Belgium was a €64m market in the year to June 2018. Volume of dairy increased to 13,400t, up 9% on the previous year. This growth was driven by a massive surge in Irish exports of whole milk powder and skim milk powder, and lesser growth in higher value butter, cheese and infant formula.
The retail sector has a preference for domestic production, with the Belgian Blue particularly famous. However, there is evidence that Irish beef is gaining traction. During a recent visit by the Irish Farmers Journal to the Ahold Delhaize store at Enghein, crowds of people were gathered around a Bord Bia cookery demonstration featuring Irish beef and Celtic Lamb.
Delhaize is the second largest retailer in Belgium and is on a refurbishment programme that is presenting Irish beef on a premium shelf – beside organic beef – while the mainstream Belgian-produced offering is presented on a different isle.
Similarly, their lamb offering is exclusively drawn from Ireland and Britain and presented under the Celtic Lamb label. This brand carries the Irish and British flags with the Irish flag having much greater prominence – perhaps an indication of Delhaize getting Brexit ready?
Belgium’s rise to becoming a solid market for sheepmeat exports
The emergence of new markets for sheepmeat exports has been vital to compensate for lower sheepmeat exports to the French and UK markets. Growth in exports to new or emerging markets has been impressive with Belgium, Germany, the Netherlands and Sweden, among others, developing as important destinations for Irish lamb.
The added bonus along with importing significant volumes of sheepmeat is that these outlets are all high-value markets with opportunities for primal and higher value cuts along with choice carcase exports.
If we take a closer look at Belgium, the volume of Irish sheepmeat exports has trebled over the last decade with imports in the last three years performing steadily and surpassing 3,000t, with a value in the region of €24m to €25m. The latest export figures for January to July 2018 show exports to Belgium holding steady at 2,040t. The fact that total export volumes for January to July reduced 15.7% to 26,118t on the back of tighter supplies this spring underlines the importance of the market.
The Belgian market has a consumer base of 11 million people, with over one million of Muslim faith. As is the case across Europe, consumer retail and cooking trends are continually changing. Roasting cuts such as legs of lamb are no longer the cut of choice and are reserved for special or celebratory occasions, with lamb also a popular offering on restaurant menus. The cut of choice is lamb cutlets or chops but alternative products such as sausages, burgers and skewers are also growing in popularity. While the market has also reduced, there is still significant butcher demand for well-conformed carcases.
Problems for Belgian producers
Belgium has a small sheep sector, which has been plagued in recent years by bluetongue disease and the Schmallenberg virus. As such, the market is reliant on sheepmeat imports, with consumers happy that Irish and UK sheepmeat is a high-quality product that is not displacing domestic produce.
Irish lamb has grown its market share over the last decade with two factors greatly helping our cause.
Lower volumes of New Zealand sheepmeat coming into the EU market opened up export opportunities, while the acquisition by Irish Country Meats of Belgium’s premier processing plant, A Lonhienne, in 2011 has helped to develop solid trading avenues.
Promotional work by Bord Bia and other sheepmeat factories is also reaping rewards.
Dairy: milk production in the southern hemisphere building up
Milk production in the southern hemisphere is building just as demand for dairy is dropping back somewhat.
As we move into the final quarter of 2018, milk production across Europe winds down to its seasonal low. Right now, dairy commodity prices are in retreat as milk supply pressure builds in other parts of the world, most notably New Zealand and South America.
On the supply side, milk flows are building. In New Zealand, milk production is up almost 6% in the first three months (June to August) of the 2018/19 season. Kiwi farmers are now moving into peak months for production, and barring a significant weather event, continued strong supply figures will keep a lid on dairy markets in the final quarter of 2018.
In Europe, the milking season is winding down but markets are still digesting how much of an impact the summer drought actually had on milk supplies. Dutch milk production has fared the worst, falling 3% for August and 4.5% for September. However, milk production in France and the UK was down less than 1% in both countries for August. Eurostat is yet to publish figures for August and September milk production in Germany, which is Europe’s largest producer.
In Ireland, August milk production was up 4% year on year, while an Irish Farmers Journal survey pegs September milk collections as being up more than 10% on last year. US milk production is running ahead of last year by 1%.
On the demand side, uncertainty is growing. The heightening trade tensions between the US and China, not to mention the uncertainty around Brexit, is denting market confidence. Fuelled by the World Cup in Russia, dairy demand was exceptionally strong in the first half of 2018, particularly for cheese. Tight supplies of butter also saw cream and butter prices shoot to record highs once again in 2018.
However, prices have been in retreat for the last month, with milk powder prices particularly weak.
The biggest positive on the demand side right now is a rebounding oil price. With Brent crude oil prices trading steadily above $80/barrel, this should reinforce the buying power of oil economies that are key to global dairy export trade accounting for 30% of all milk powder demand.
Dairy commodity prices are certainly under downward pressure right now, which could feed through to lower farmgate milk prices. However, European markets will get a chance to breathe over the winter months and demand could be renewed come 2019. New Zealand farmers will have a big role to play in how market sentiment looks next year.
Tillage: global maize harvest offsetting a difficult season for wheat
The forecast for global grain production (wheat and coarse grains) in 2018/19 has now been revised upwards by nine million tonnes (mt) from 2,063mt to 2,072mt. Despite this revision, however, this forecast will still represent a second consecutive annual decline in global grain production as increased output from maize (+27mt) and sorghum (+1mt) is being outweighed by reductions for other crops, namely wheat.
After a difficult growing season in a number of regions, wheat production is expected to be down by 41mt, while the smallest barley harvest in six years is expected to be recorded.
Ongoing weather concerns in Canada, Europe and Australia are affecting harvesting, planting and crop development respectively, which is helping to sustain current grain prices.
However, as expected, global maize output was yet again revised upwards – the US at +6.1mt, EU at +2.7mt and Ukraine at +1.2mt – which is in part offsetting the losses in global wheat and barley output.
Soya still on track for bumper year
Prospects of a record soya bean crop in the US, Canada and China increased the projection for 2018/19 world soya bean output by 4mt. It is now expected to peak at 370mt, a 9% increase from last year. Despite a very challenging year for oilseed rape production, 2018/19 out is expected to remain largely unchanged at 603.9 mt.