Tuesday, 26 February 2013

Questions (598)

Joe McHugh

Question:

598. Deputy Joe McHugh asked the Minister for Agriculture, Food and the Marine his views on current sheep prices; the work that he is doing to improve prices; and if he will make a statement on the matter. [10222/13]

View answer

Written answers (Question to Agriculture)

The market performance of the sheep sector, in common with other agricultural sectors, is a function of supply and demand. I am aware that sheep prices for the year 2013 to date are disappointing for producers and are running at around 17% below the 2012 level for the corresponding period. This decline is reflected also in other EU member states and can be attributed to a number of factors including increased imports from New Zealand and the impact of austerity in Europe on demand generally. However, I would like to put the current difficulties in context.

After successive years of decline, 2011/12 saw an important turning point for the Irish sheep industry. It was a period when confidence grew on the back of incremental growth in the national breeding flock. This brought about increased throughput at farm and processing level. During that same period Irish sheep exports delivered double digit growth and retail sales of Irish lamb have grown steadily. These developments are in sharp contrast to other Member States, where sheep meat production and domestic consumption have been falling.

Throughout 2012 a higher demand from both the domestic and export markets were evenly matched with supplies, particularly during the peak periods of hogget and main season lamb supply. Slaughterings in 2012 were up 12%, or 260,000 head to 2.43 million sheep. This included 68,000 extra hoggets, 160,000 extra lambs and 32,000 additional ewes and rams slaughtered in 2012.

On another positive note, exports of Irish sheep meat registered a solid performance in 2012 where total value rose by 7% to €205 million. Seventy percent of our production was exported, the vast majority of which was destined for the EU market. Just over 42,000 tonnes were exported to over 24 individual markets across the globe in 2012. France and the UK continue to be our core export markets representing three quarters of our volume exports. Strong increases in shipments were recorded to Belgium, Germany and Sweden as exporters continue to secure new business and grow volume with existing customers. Despite the ongoing pressure on retail meat sales in Ireland, lamb held its own, with data from Kantar Worldpanel showing a rise of almost 4.5% for the 52 week period ending November 2012.

Tighter global supplies that characterised the sheepmeat markets in 2011/12 have eased slightly as global production edges up 1% to 13.6 million. Good pastures and favourable lambing conditions in Australia and New Zealand have reversed four years of declining output. Production in both countries is forecast to grow by 3-5% this year. Due to the ongoing austerity in Europe and with an increase in the availability of cheaper lamb from the southern hemisphere, in comparison with 12 months ago, the price differential between New Zealand and EU lamb has been widening since summer 2012. The carryover of UK hoggets into 2013 has also put downward pressure on prices in the early months of 2013.

Today’s consumer seeks value and is prepared to switch to a cheaper protein option. Lamb is perceived as a relatively expensive meat and Bord Bia promotion campaigns play an important role in positioning lamb as a preferred choice. Increasing the frequency of purchase of Irish lamb and encouraging shoppers to look for the Bord Bia Quality Mark on-pack when shopping will be the key objective of the Bord Bia 2013 lamb promotions. Promotional activities will include radio advertising, which will be undertaken around Easter, announcing the arrival of early season lamb amongst consumers. Similarly, a series of promotional activities to include PR, publicity and in-store activities will be undertaken to coincide with peak availability of new season lamb. The TV advert highlighting the unique flavour of Irish lamb due to our ideal climate will play a central role in our 2013 promotions.

Overall numbers of lamb producers in the Bord Bia Lamb Quality Assurance Scheme (LQAS) stand at just over 9,300, which roughly equates to 45% of our national throughput. I recently launched the Sheep Technology Adoption Programme (STAP), which I believe will be a key element in driving the ambitious target for the sheepmeat Sector in Food Harvest 2020. The STAP is intended to provide participants with the knowledge and the skills necessary to improve on-farm technical efficiency in a number of key areas. The sheep sector is a key part of the Agrifood sector, especially in marginal land areas and there is huge scope to improve farm incomes through focusing on issues such as grassland management, financial management, breeding, health and welfare and environmental efficiency. The STAP provides an opportunity to grow the membership base of the LQAS amongst lamb producers, while also promoting the adoption by farmers of best practice in the various aspects of sheep farming. I have allocated €3 million to the STAP for 2013, with a maximum payment of €1,000 per participant. Though the Grassland Sheep Scheme was due to expire at the end of 2012, I decided to extend it for another year and am providing some €14 million for this purpose in 2013. The scheme will be funded from unspent Single Farm Payment funds. I am also providing for a continuation of the sheep fencing scheme in the amount of €3 million this year to enable many farmers in the sheep sector to complete the necessary investment works in order to maintain competitiveness and introduce increased efficiencies on their farm and so secure the future of their enterprises. I am confident that all of these initiatives will be of significant assistance in developing a strong and sustainable sheep sector for the future.