BACKGROUND PAPER

MEAT

Note: The views expressed in this background paper do not purport to reflect the views of the Minister

or the Department of Agriculture, Food and the Marine

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This paper will cover beef, sheep, pigmeat and poultry.

Beef Analysis 2025

Background

Economic contribution

The Beef Sector, with its almost uniquely widespread geographical coverage, is among the

most important Irish indigenous industries. There are over one hundred thousand farms

contributing to cattle output in Ireland. The Irish Beef sector is mainly broken into Suckler

producers and cattle finishers, with nearly 1.5 million head of cattle sent for slaughter in Irish

meat processing plants in 2013 alone. At over €2.1 billion, the production of bovine animals

accounted for 30% of the gross output of the agriculture sector in 2013, making it the most

important primary agriculture product in Ireland at farm level.

Beef Exports

Ireland exports 90% of the beef produced here. It is the biggest net exporter [by value/volume

or both] of beef in the EU and the 5th biggest in the world. Exports in 2013 amounted to

470,000 tonnes worth over €2.1 billion. This represented a 37% increase in the value of

exports since 2010. The United Kingdom remains the dominant export market for Irish beef,

representing 53% of exports or 250,000 tonnes. Most of the rest of our beef exports (214,000

tonnes or 45%) go to Continental Europe, particularly France, Italy, the Netherlands, and

Scandinavia.

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Irish beef prices relative to non-EU International Competitors (Brazil and US)

Irish prices increased substantially from 2009 to June 2013, where they hit record highs. Prices have

fallen since then as a result of a number of factors, including increased supply and falling

consumption. A tightening of supply should lead to some rises towards the end of 2014 and into

2015.

Prices in the USA also have been on an upward trend for a number of years, with weather related

supply constraints having a particular impact. The USDA expects prices to continue to rise in the

short term as a combination of the drought in 2012 and the dry conditions affecting beef producing

states of Texas and Oklahoma continue to have an adverse effect on beef output..

Brazilian beef prices have been rather more variable since 2009 but have been on a steady increase

since 2013 as drought has affected their grass based production system. Increased exports to Russia,

on foot of the Russian ban on EU imports, is expected to continue to push Brazilian prices up, at least

in the short term. Competition for land use from arable crops may limit production increases.

However it is believed that Brazil is now exploring a rapid intensification of its beef output and

analysts predict that their output from feedlots could double by 2022. This reflects the belief in Brazil

that they are best placed to take advantage of growing demand for beef products in markets such as

Russia where EU and Australian beef is currently excluded.

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Live animal trade

In addition to beef exports, Ireland also has a strong live export trade to Europe and beyond.

In 2013 209,000 head of cattle were exported to our main markets in the UK, particularly

Northern Ireland, Spain, Italy and the Netherlands. A large number of young calves are

exported to Belgium, Spain and the Netherlands, while the UK and Italian markets are

important destination for weanlings, stores and finished cattle. Last year, nearly 20,000

animals were exported outside the EU, with most of these going to the Libyan market.

Current Sectoral Goals

The medium term policy for the sector has been shaped by a combination of the strategic

goals laid out in Food Harvest 2020 and, following on from that, the recommendations of

Beef Activation Group established to oversee the implementation of FH2020. The Beef

Activation Group focused on areas such as breed improvement, technology transfer, animal

health concerns, processing efficiencies, and market development.

The Beef Activation Group recommended increasing the headline target contained in

FH2020, in the value of beef output from 20% to 40% by 2020. This more ambitious target

has already essentially been met, with the value of output having increased by 39% by the

end of 2013, however it is noted that the 2013 output levels were buoyed by all-time price

highs and the sector continues to face a number of challenges.

Economic Analysis

Price volatility

The marked decline in beef prices in the last 12 months follows a period of unprecedented

price increases. Price volatility and fluctuations in returns to producers will continue to be a

feature of the marketplace. The graph below demonstrates the evolution of beef prices in

Ireland over the last 10 years, relative to GB and the EU15

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Farm incomes

There is huge variation in profit levels between farmers in the beef sector. Nonetheless, the

average beef farm is a loss making enterprise when income and investment supports are

excluded. Direct payments, which incorporate all public farm supports, account for an

average of 165% of family farm income on suckler farms and 119% of family farm income

where beef finishing is concerned.

Teagasc’s National Farm Survey (NFS) publishes detailed annual data on farm level

economics. It is a national survey of over 900 farmers, representing a population of circa

79,000 farms, though it is important to note the NFS only includes farms with a standard

output of €8,000 or more (equivalent of 14 suckler cows)

The National Farm Survey in 2013 shows average family farm incomes of €20,019 and

€7,988, for full and part-time farmers respectively, in cattle rearing enterprises (suckler

farms). The figures are higher for other cattle (fattening) farms with average full-time family

farm incomes of €30,999 and part-time family farm incomes of €11,141. This is compared to

an average €65,287 family farm income for full-time dairy farmers.

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Sectoral heterogeneity

The beef sector is made up of very diverse types of farming enterprises based on the progeny

from both dairy and suckler cow herds, with a higher prevalence of suckler cows (50% of

beef production) than many other EU member states where about 2/3 of beef production

comes from the dairy herd. Suckler production systems vary from production of weanlings to

calf-to-beef systems, with a variety of different beef fattening enterprises finishing steers,

bulls and heifers at different ages and at different times of the year. These enterprises vary by

scale, structure, degree of specialisation, intensity, and whether they are operated with other

farm and non-farm economic activities. These alternative production systems result in

different production dynamics and associated economic returns.

Graph: Number and category of cattle slaughtered at meat plants

Grass based production

Grass based beef production gives Irish farmers an important competitive cost advantage over

international competitors. Teagasc notes that, on average, the cost of producing 1kg of live

weight from grass is 80-85% less when compared to an intensive concentrate-based system.

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When a calf is weaned from the cow in Ireland, there is potential to achieve 80% of its live

weight gain from weaning-to-slaughter from grazed grass.

International Trade Agreements

The EU consumes about 7.8 million tonnes of beef each year, with the key high value cuts

segment of the market amounting to about 500,000 tonnes. Currently imports into the EU

amount to over 300,000 tonnes and the import requirement in the coming years is not

predicted to go much beyond 400,000 tonnes.

In addition to ongoing deliberations in the WTO, the EU is currently negotiating bilateral

trade agreements (incl. with US, Mercosur and Canada) with which will impact on beef

supplies in Ireland’s primary export markets in the EU. This will particularly impact

competition in the high value cuts end of the market which, while small in volume terms,

accounts for over 25% of returns in terms of value.

Processing sector

The Irish beef processing sector comprises 32 major slaughtering facilities, which are

supervised by DAFM and are approved to export from Ireland to local, EU and third country

markets. There are 195 low-volume slaughterhouses supervised by the Local Authority

Veterinary Service that may export within the EU. In addition, there are a significant number

of standalone (i.e. no slaughtering) beef boning and beef added value processing businesses.

While annual throughput in 2013 was 1.5 million cattle, implying a weekly average of

28,800, in actual fact however there are seasonality influences in livestock production which

means that in reality weekly cattle slaughtering ranges from 24,000 to 33,000 head.

While some of the excess capacity and scale issues in the industry were addressed by the

Beef and Sheepmeat Investment fund, slaughtering on 3 or 4 days per week is still the norm

in many slaughter facilities.

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Social Analysis

Size and Distribution of the National Herd

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While the beef sector is ubiquitous in Ireland, with suckler and beef finishing farms spread

throughout the country, the size of these farms tends to get larger when moving from west to

east. The 2010 Census of agriculture showed that there was an average of 12 cows in the

NUTS 31 west, border and south western regions compared to regions such as the midlands

mid-east and south east which had an average of 19 cows.

The long term tendency of rising sucker cow numbers and declining dairy cow numbers has

altered slightly in recent years. The increased interest in dairy production post quotas will

result in some farmers shifting from beef to dairy production in the coming years; mainly

younger, better educated farmers on larger holdings.

Effects of more beef supply from the dairy herd and possible reduction in suckler numbers

The number of beef animals coming from the dairy herd is expected to increase substantially

in the coming years as the sector expands in response to the abolition of dairy quotas in 2015

with Teagasc estimating that a c330k increase in dairy cows numbers will be necessary to

achieve the 50% increase in milk production targeted in FH2020. This level of increase will

produce an 150k male calves per annum. However an increased use of sexed semen could

cause this figure to drop substantially. The use of sexed semen by Irish farmers is still in its

infancy and results in 2014 are believed to have been mixed (lower conception rates than

some expected.

The additional progeny not used as replacements in the dairy herd will impact on the beef

market. The direct implication for suckler cow numbers is difficult to predict and is

dependent on a range of internal and external factors. FAPRI-Ireland projections suggest a

decline in suckler cow numbers by over 200,000 animals to around 800,000 for the period to

2030. The reduction in suckler numbers is less than the anticipated gains on the dairy side.

Overall, this leads to a marginal increase in the volume of beef produced, although the type of

animal going to slaughter will change to reflect the greater influence of the dairy herd in

supplying the source animals; this has implications for the beef supply chain and market

returns.

1 EU Nomenclature of Territorial Units for Statistics. In Ireland it is classified hierarchically from Level 1 (Ireland) with Level 3 consisting of the Border, West, Midlands, Mid East, Dublin, South East, South West and Midwest regions.

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The above predictions will be obviously be influenced by a number of factors including:

The absence of any EU bilateral trade deals

The introduction of a well-funded RDP scheme for the suckler sector which will also

impact the evolution of suckler numbers.

The take-up of sexed semen by Irish farmers.

Market Demands and Pricing

Irish beef is now listed with more than 75 high-end retail chains across EU markets. This

wide portfolio of customers has contributed significantly to higher returns for Irish beef in

recent years and reflects the success of Bord Bia’s differentiation and premiumisation

strategy, which focuses on the key attributes of Irish beef: environmentally sustainable, grass-

based production systems, full traceability, quality assurance at all stages and superior eating

quality.

The pricing structure for beef animals in Ireland reflects market demands around the fat (1-5)

and conformation (EUROP scale) scores of the animals based on a carcase classification grid.

The Quality Payments System (QPS) is a payments system agreed between farmers and

processors in order to incentivise and reward the production of higher quality animals. In

addition, a bonus is paid for animals from quality assured farms that are under 30 months of

age and have resided on no more than 4 holdings. Retail preferences for smaller steak cuts

also results in reduced price per kilo for animals above defined weight levels.

Technological Analysis

Genomics

Animal genetics is a powerful tool that aids farmers in identifying superior animals as the

parents of the next generation. A central focus of improving on-farm profitability is on

optimising animal growth and reproductive performance by using high genetic merit animals.

Knowledge of the DNA profile of calves at birth, and how the DNA profile affects

performance, can facilitate a more accurate prediction of how an animal will perform –

known as genomic profiling. Investment in this area can position Ireland at the cutting edge

of genetic selection and herd development.

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Increased output and efficiency

There are considerable opportunities to improve the output and efficiency of the National

beef herd through a range of new technologies and herd management techniques as outlined

below:

● Improving grass management and utilisation

● Reducing the national average calving interval from its current level of over 400 days

● Increasing the number of calves born per cow per year from current figure of 0.8

● Increasing percentage (currently less than 25%) of cows producing a calf within a 12-

month period.

● First-calving at 24 months of age in a higher proportion than the 10% of heifers where

this is presently achieved.

● Continuing advancements in well designed herd health programmes

● Collaborating with other farmers to achieve scale or share facilities.

Breed policy

Charolais and Limousin sires accounted for 73% of calves in the beef herd in 2013. 90% of

beef calves born in Ireland came from 5 breeds of Dam - Charolais, Limousin, Angus,

Hereford and Simmental. 69% of beef sired calves in the dairy herd came from early-

maturing Aberdeen Angus and Hereford sires, mostly because of ease of calving and short

gestation traits of these animals.

ICBF research shows that selection of animals based on replacement and terminal indices

should be the key determinant of animal selection as there is as significant a variation within

breed as there is across breed. At the same time, producing the right animals with the

appropriate breed and genetic traits for the production systems in place, and with a view to

market specifications, is vital for the sustainability of suckler enterprises

Environmental Analysis

Greenhouse Gas Emissions from Beef Farming

In a European context, Irish greenhouse gas emissions from Beef farming is very low

compared to many of our fellow member states. Ireland’s emissions per kg of beef are 18.4

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kg/kg2compared to an EU average of 22.2kg/kg. Our traditional grass fed production system

allows animals on the land for longer periods and relies less on intensive feeding months

indoors. However, at 32% of national emissions, agriculture is also responsible for a greater

share of national emissions in Ireland compared with our EU neighbours. This reflects the

considerable importance of agriculture to the Irish economy and the significance of the

livestock industry.

Under the 2008 climate and energy package, Ireland is required to deliver a 20% reduction in

non-ETS GHG emissions by 2020 (relative to 2005 levels). Agriculture is the largest source

of emissions in the non-ETS sector and a high proportion of its emissions come from

agricultural livestock where cost effective mitigation is limited. In January 2014, the

European Commission brought forward a Communication on proposals for a 2030 policy

framework for climate and energy3. Under this proposal, emissions from sectors outside the

EU ETS would need to be cut emissions by 30% below the 2005 level. This effort would be

shared between the Member States although details on how the effort-sharing would take

place have not yet been elaborated upon.

Origin green

Origin Green is a national sustainability programme developed in Ireland by Bord Bia – the

Irish Food Board. It offers an independently verified structure for Irish farmers and food

manufacturers to demonstrate their sustainability performance and develop plans for further

improvements. The target for the programme is to have 75% of food and drink exports

coming from farms and food manufacturers that are members of Origin Green by the end of

2014.

At manufacturing level, Food companies can become a verified member of the programme by

developing a multiannual sustainability plan focussing on sourcing, resource efficiency and

social sustainability.

The focus of the programme at farm level is to incorporate issues such as greenhouse gas

emissions, water, biodiversity, energy, waste, animal welfare and soil health. . Carbon foot

printing has been central to the rollout of a sustainability audits, funded by DAFM, across all

2 European Commission’s JRC Report of 2010 “Evaluation of the livestock sector's contribution to the EU greenhouse gas emissions (GGELS)3 http://ec.europa.eu/clima/policies/2030/docs/com_2014_15_en.pdf

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43,000 beef farms that are members of the Beef & Lamb Quality Assurance Scheme

(BLQAS)

Regulatory Analysis

Dairy Herd Expansion

The number of beef animals coming from the dairy herd is also expected to increase

substantially in the coming years as the sector expands in response to the abolition of dairy

quota in 2015. The additional progeny not used as replacement in the dairy herd will impact

on the beef market

Labelling

Beef in the EU must satisfy both mandatory and voluntary labelling requirements

Mandatory labelling requires that all marketed beef must include inter alia the origin of the

beef i.e. the country where it was born, reared and slaughtered. The Voluntary labelling rules

will come under general labelling rules from December 2014.

These labelling requirements are particularly important for an export dominated industry,

including in markets where there is a clear preference for national products. This also impacts

on the market outlets for live exports from Ireland when they are eventually slaughtered.

Producer Organisations

DAFM has recently conducted a public consultation on the possibility of legislating for

producer organisations in the Beef Sector. Producer Organisations provide a vehicle for

producers to co-ordinate and collaborate in a range of areas such as quality improvement,

product development, promotion and marketing. It is widely accepted that beef producers are

in a poor bargaining position when it comes to selling their beef animals; producer

organisation offer the potential to join together in negotiating terms and conditions with meat

processors, while also assisting processors in ensuring a continuous year round supply.

Market Access

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In recent years there have been noteworthy successes in securing beef market access from

authorities in Japan, Singapore, Egypt and Iran. In 2014 alone, Ireland agreed access terms

for beef with the Lebanon, Philippines and Namibia. Ireland is finalising technical

arrangements with the US authorities which should see exports of Irish beef to the US

commence shortly, while good progress is being made with the Chinese authorities.

Market Outlook

Based on EU Commission projections, the net production of beef and veal in the EU –

currently about 7.6 million tonnes carcase weight equivalent in 2013 – is expected to increase

slightly in the short term, before declining again to just under 7.5 million tonnes in 2023. The

OECD-FAO projections are roughly similar.

Consumption in the EU, the market which accounts for over 98% Irish exports, has declined

by 5% since 2010 to under 7.8 million tonnes in 2013. Consumption levels are expected to

increase in the coming years to over 8 million tonnes in 2016 before declining slowly again to

under 7.8 million tonnes in 2023.

In contrast with the EU, global beef production is forecasted to grow by over 12%, which in

volume terms would result in an increase that is above the full amount of EU production.

This increased production is forecast to lead to an increase in global exports by over 2 million

tonnes from about 9.9 million tonnes to 11.9 million tonnes. Like with global production,

global consumption is forecast to rise substantially – by over 12% and by more than the full

amount of beef consumed in the EU.

Demand for beef will continue to grow in Asia with consumption expected to rise by 8% over

the next 5 years. By 2019, Asia will account for 45% of global beef trade with China

absorbing much of the rise in globally traded beef. Beef exports from Brazil, Australia, USA,

Uruguay and Argentina are projected to rise by 400,000 tonnes by 20194.

4 Bord Bia Meat & Livestock Market Outlook Autumn 2014.

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Sheep Analysis 2025

Background context from the Food Harvest 2020 report

In common with all major producers across the EU, Ireland’s sheep sector has witnessed

downward pressure on production over recent years with reductions in flocks and pressure on

income. However, it is expected that over the coming years, demand on the European market

will outstrip production levels, which could provide opportunities for exporting countries

such as Ireland. This should provide the potential for better returns provided the industry can

continue the market and product diversification evident over recent years. At producer level

there is likely to be improved price prospects provided an increased focus on production

efficiency and product quality is evident.

Sectoral goals from the Food Harvest 2020 report

When domestic consumption is included, it is estimated that the Irish sheep industry is

currently worth about €250 million, with over two thirds of output exported. With a renewed

commercial focus by the sector, building consumption on the domestic market and through

the implementation of the recommendations listed underneath a growth in output value of

20% is achievable by 2020.

Current sectoral analysis

The market diversification evident over recent years was largely maintained with a third of

shipments destined for markets other than France and the UK in 2013.  These high value

markets such a Belgium, Germany and Sweden continue to outperform others both in value

and volume growth.  Bord Bia has intensified its promotional support in developing this high

value markets particularly with regards to the development of an Irish branded lamb offering.

In 2003 Ireland exported €156 million of sheepmeat product, equivalent to 44,000 tonnes. 

Almost 80% of these exports were shipped in a carcass form, the balance of 9,000 tonnes was

exported as a boneless, higher value product.  Since then the value of our sheep meat exports

have risen by 41% to €220m.  A significant factor which has driven this value growth has

been the move towards boneless product.   It is estimated that 65% of our sheep meat exports

is in the form of boneless/break out product.

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The National Sheep Census conducted in December 2013 showed there were 34,304 sheep

flocks with an overall total of 3,530,802 sheep. This represents a decrease of approximately

50,000 head on the previous year.

The Teagasc National Farm Survey for 2013 shows that there were approximately 12,650

sheep farms with an average family farm income of €11,731 in 2013, a very large 36%

decrease on 2012. Although these farms may operate a number of other farm enterprises,

sheep production is the predominant system on these farms.

The income decrease on Sheep farms in 2013 of 36% was due to a combination of increased

direct costs and lower output driven by lower levels of agricultural activity on farms. Average

lamb prices increased marginally from an average of €94 in 2012 to €95 in 2013. Input

expenditure on Sheep farms increased in 2013, with direct costs up 15%. This increase was

almost entirely due to increases in feed costs. Concentrate feed expenditure increased by

almost 20% while expenditure on bulky feeds increased by 62%.

The average Single Farm Payment per hectare is €229 for sheep farms, the lowest of all farm

systems and considerably lower than the national average of €302 per hectare. On about 29%

of sheep farms the farmer has off-farm employment. The SFP for most sheep farmers will

improve over the course of the new CAP as they stand to be amongst the beneficiaries of

convergence in addition to availing of RDP schemes such as GLAS.

About 31% of Sheep farms produced a family farm income of €5,000 or less in 2013, with a

further 21% earning between €5,000 and €10,000. About 8% of sheep farms produced a farm

income of €30,000 or greater. The larger and more profitable flocks are in lowland areas

while the less profitable flocks would be in hill areas.

Future market prospects

Bord Bia produced a document entitled “Sheep Outlook” for the 2014 National Ploughing

Championships which is at Annex 1 below. The sector has performed well over the past 5

years and this trend is expected to continue for the next 5 years.

Specific actions undertaken/planned Rural Development Programme

Funding of €8m has been allocated and committed under the Rural Development Programme

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2007 -2013 to aid approximately 3,400 sheep farmers under the current Sheep handling /

Fencing Scheme. The scheme closed on the 31 December 2013.

Under the new Targeted Agricultural Modernisation Scheme included in the Rural

Development Programme for the 2014/2020 period it is proposed to continue to support

investment in sheep with funding to be provided for animal housing targeted at beef and

sheep farmers and a farm safety scheme including the provision of sheep handling facilities.

The overall available budget is €395m over the lifetime of the Programme. The sheep

measures to be funded will be included within this allocation.  

Sheep Technology Adoption Programme

The Sheep Technology Adoption Programme commenced in 2013 and was continued for a

second year in 2014. It provides for the establishment of discussion group among sheep

farmers, similar to model previously used for dairy discussion groups and the Beef

Technology Adoption Programme (BTAP). Funding of €3m was provided for the programme

in each year and the number of producers participating and the positive feedback from

participants attests to the success of the programme. Under the proposed new Rural

Development Programme (RDP) provision has been made for improving efficiency and

profitability in sheep production under the knowledge transfer measure and the lessons

learned from STAP will inform the development of this measure. The RDP programme will

provide support to farmers by means of a range of measures across a number of priorities,

including environmental objectives.

Breed improvement

Sheep Breed improvement functions were traditionally carried out by the Department under

the Pedigree Sheep Breed Improvement Programme (PSBIP). The Sheep Industry

Development Strategy (‘Malone report’) recommended the transfer of these duties to ICBF in

its report launched in July 2006. Industry discussions took place for many months on the

recommendation to transfer sheep breeding functions from the Department. The interim

board of Sheep Ireland was established in July 2008 and this board adopted the report of the

strategy project team lead by Dr Peter Amer who was commissioned to complete a review of

sheep breeding in Ireland.

A totally new breeding infrastructure was developed (database, data collection facilities,

designing appropriate breeding indexes, breeding schemes to identify the best terminal and

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maternal genetics) in conjunction with all Industry stakeholders. The new breeding

infrastructure was designed along the lines of the very successful dairy and beef programmes.

A new organisation; Sheep Ireland was established in 2008, having a close relationship with

ICBF.

Processing

The Beef and Sheepmeat fund was launched in 2008 and provided grants to various meat

processors mainly on the beef side but including some for Sheep.  Enterprise Ireland

administers the scheme and DAFM provides the funding. The scheme is still ongoing.  The

objective of the Beef and Sheepmeat Fund is to support capital investment which is expected

to:

a. Increase scale and efficiency in primary processing without increasing overall

national capacity.

b. To increase added value in further processing by way of moving output beyond its

primary form to nearer the end user ie retail, food service and manufacturing outlets.

The progression of a number of strategic change initiatives is a priority  of the Beef and

Sheepmeat Fund.

The scheme focuses on efficiency gains by reductions in fixed costs due to scale and

improvements in capacity utilisation, Yield improvements derived from improved

technologies in primary processing and in particular boning activities and utilisation of by-

products which heretofore would have been rendered at a cost to the business.

Promotion

In 2013 the EU Commission agreed to include sheep meat as an eligible product for support

under the Generic EU Co-Funding of Food Products.   The decision was in response to

growing concerns around the decline in both sheep meat production and consumption which

have fallen by almost 25% since 2000.  The Agneau Presto promotion which ran for seven

consecutive years (2007-14) was also instrumental in influencing the Commission to allow

sheep meat to be eligible for funding under the EU co-funded promotion.

In June 2014, Bord Bia together with Eblex and Interbev submitted a joint application for a

proposed EU-Funded Generic Lamb Campaign.  The campaign which will run over three

year (2015-18) has a clear and ambitious target of reaching out to consumers (18-40yr olds)

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across a number of European markets to include, Belgium, Denmark, France, Germany,

Ireland and the UK.   Key messages of the campaign will focus on

(i) Establishing a role for lamb for everyday consumption and

(ii) Stressing the provenance and importance of European lamb production. 

The Bord Bia Lamb Quality Assurance Scheme (BBLQAS) logo is growing in importance as

95% of all lamb facings in Irish retail carry the mark.   Applications for the BBLQAS have

surged in recent years, membership stands at over 12,500, equivalent to 65% of national

throughput

In terms of home market promotions the objective focused on increasing the frequency of

purchasing of lamb among relatively heavy lamb purchasers during peak season and to

encourage them to choose lamb with the Quality Mark when shopping.  Coinciding with the

peak availability of new season lamb, a series of promotional activities covering PR,

publicity and social media activities were undertaken.  In addition, a TV advert highlighting

the unique flavour of our lamb was aired for a total of eight weeks during the summer months

and again in August and September.

Sustainability considerations

Following the development of an accredited carbon footprint model in late 2013 for the Irish

sheep meat processors and the successful piloting of the carbon footprint at farm level in

2014 (currently seeking accreditation from Carbon Trust) it is proposed to progress routine

carbon assessments for lamb producers in BBLQAS.

There is clear evidence that European retailers are putting a stronger emphasis on sourcing

from more sustainable producers. The buying policy of one large retailer on the continent has

shifted away from New Zealand and instead sources one hundred per cent of their lamb from

within Europe provides an important signal on their commitment to securities of supply and

sustainability

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Annex 1

Bord Bia Sheep Sector Outlook (Sept 2014)

SHEEP OUTLOOKNew Season Lamb Supplies Reach 6 year High

Total sheep supplies for the first eight months of 2014 are running 2% higher, equivalent to

an additional 45,000 head above the same period in 2013. With fewer lambs carried over

from 2013, throughputs during the main hogget season were back 6% on the previous year at

734,000 head. However, in sharp contrast new season lamb supplies reached a six year high

largely due to an exceptional good lambing season and a plentiful supply of grass throughout

the spring and summer months. For the period May to August total new season lamb supplies

stood at 984,000, representing an 8% increase on last year.

Graph 1: Sheep Throughputs 2014 v’s 2013

5% increase in sheep meat production

With reports of good breeding sales and brisk trade for the store lambs there is a growing

sense of optimism at farm level. In line with this renewed confidence it is expected that the

breeding flock will increase by 2-3% to 2.72 million. On the basis that sheep disposals

continue to hold strong for the remainder of the year total throughputs for the 2014 will

approach the 2.7 million head. With average carcase weight rising by 1% during the year

production is forecast to reach to just over 53,000 tonnes.

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Absence of Libya impacts on Live Trade

Exports in live sheep have fallen significantly on the record highs of last year this was largely

down to the absence of live trade to Libya.  Up until the end of July 2014, live exports stood

at 10,768 back 27,164 head, equivalent to 72% drop year-on-year.  In 2013 almost 60% of

our total live exports were destined for Libya however with the growing instability in the

market, live exports has ceased. Looking ahead, live exports should pick up in the lead up the

Muslim festival of Eid-al-Adha which falls on the 4th October.

Average Sheep prices up 3%

At €4.88/kg average prices for the first eight months of the year were up 3% or 15 cent. A

significant part of this price gain was achieved during hogget season (Jan-April), where

average prices reached €4.91/kg up 38c/kg on the previous year. Prices remained strong

throughout May and June at a time when traditionally the seasonal price adjustment normally

kicks in. By early July, sheep meat prices eased as weekly throughput levels both in the

Ireland and the UK increased. For the season to date (May – mid Sept) average prices for

new season lamb were marginally back by 6 cent at €4.87/kg.

Graph 2: Average Sheep Prices (2014 v’s 2013)

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Average Prices (Jan – Aug)

2012 €4.81/kg2013 €4.73/kg2014 €4.88/kg

Ireland & UK buck the European decline in production

Sheep meat production in the EU has been through a period of decline, with the four of the

largest producers (UK, Spain, France and Ireland) recording a fall in production over the last

decade. However similar to Ireland production in the UK has increased over the last five

years. With a 2% increase in the UK breeding flock and improved lambing rates in 2013

sheep disposals for 2014 is forecast to be up 5% year on year to 13.06million head.

Combined with higher carcase weight the supply of new season lamb for the remainder of

2014 would see UK production above 300,000 tonnes for the first time since 2009.

Production continues to stall in New Zealand

Australia and New Zealand are clearly the dominant sheep meat exporters, representing 86%

of global trade in 2013. Their export volumes have fallen in recent years as a knock-on effect

of drought and the competition for land from more profitable enterprises such as dairy.

According Beef and Lamb New Zealand the 2014-15 export lamb slaughter is forecast to

decrease by 3.3% to 19.5 million head. The decline reflects an increase in hoggets retained

with the flock expected to show a slight recovery in the year to 30 June 2015.

As confidence builds on the back of improved prices the medium term outlook is that gains in

production and export availability will be directed towards Asia. It is worth noting that 2013

was the fourth successive year that New Zealand failed to fill their EU quota. Coincidentally

2013 was also the year that China became New Zealand’s largest export market by value and

volume.

China Capturing a Hold on the Global Sheep Meat Market

Demand for sheep meat has been strong in Asia and in particular in China where growth is

expected to increase by 3.6% in 2014/15. China has developed an insatiable appetite for

sheep meat and even though China boasts the biggest sheep flock in the world demand has

outpaced domestic supplies.

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Graph 3: Chinese Sheepmeat Imports

China’s sheep meat imports are primarily sourced from New Zealand and Australia, with

Uruguay contributing to a small share of import volumes. The volumes and values of Chinese

imports have risen sharply – as shown by direct imports. There is strong demand for lower

value cuts as they are popular in hotpot dishes in China, these are typically frozen and then

thinly sliced. Imports to China are very largely frozen due to poor logistics for chilled in

China, and a preference for frozen by traders. While China places a bigger draw on sheep

meat from the southern hemisphere suppliers, the Irish sheep meat industry is set to gain from

the ripple effect of global demand outpacing supply. Securing market access into China

remains a priority focus for the industry.

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Pigmeat Analysis 2025

Background Context:

Food Harvest 2020 set a headline target of increasing value output by 50%, largely

underpinned by worldwide growth in demand for pigmeat and improved sow productivity

and a significant increase in the size of the national sow herd.

The Irish pig sector is cyclical in nature with periods of lower prices and production followed

by recovery and this has remained the case for many years. The industry supports

approximately 7,000 jobs including production, slaughter, processing, feed manufacture and

services. There are approximately 340 commercial pig producers, with output value in the

region of €475 million in 2013. The sector accounts for 5% of the output from the total agri-

food sector and is the 3rd largest sector by value.

2013 was a year of challenge for the sector with feed prices remaining near record highs.

Given that cereals account for up to 75% of pig feed, the impact of cereal price increases

since 2009 on the pig sector has been considerable. While there has been some easing of

soya and other cereal prices in recent months thus ameliorating some of the consequences,

they continue to remain significantly above historic averages.

Ireland is 228% self sufficient in pig meat with the result being that export markets are sought

after and valuable. During 2013 export volumes were largely unchanged but values increased

by 3% to over €525 million, continuing the growth seen in recent years. The shift in focus

towards international markets was again a feature with values and volume increasing

considerably, particularly to Russia and China. It is important to note that the domestic

market remains the primary volume outlet for Irish pigmeat and consumption in this

marketplace was largely unchanged in 2013.

The closure of the Russian market to pig meat since January 2014 has posed difficulties for

exporters. This trade was valued at almost €60m in 2013. However the availability of other

spot markets helped to alleviate the difficulties caused by the Russian ban, which coupled

with disease outbreaks in the key producing Countries of the US and Japan, sent pig prices in

Ireland to a three-year high in Q2 2014. These prices have since been largely reversed by

approximately 30c/kilo.

Spot markets are markets such as the Philippines and Vietnam which serve as valuable

alternative markets when other more mature markets for Irish product, such as Russia, are no

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longer available to take exports at short notice. Having such alternative markets available is a

key element of the DAFM strategy for exports as it helps to alleviate a crisis when

established markets close at short notice. It can also be the case that the spot markets

themselves go on to serve as key market outlets through Irish exporters putting greater focus

on the opportunity there.

The new pig welfare rules on loose sow housing which entered into force in January 2013,

posed a significant challenge for operators. During 2013 the Department worked closely with

the sector in order to achieve compliance with the new requirements and a significant amount

of grant aid was provided under the TAMS grant aid mechanism.

Sectoral Goals:

Food Harvest 2020 set a headline target of increasing value output by 50%, largely

underpinned by worldwide growth in demand for pigmeat and improved sow productivity

and a significant increase in the size of the national sow herd.

Future Market prospects:

Pig meat remains the most consumed meat worldwide with consequent opportunities for Irish

exporters given our self-sufficiency. Significant progress was made in recent years in

regaining market access and share following the product recall in 2008. This was

accompanied by new markets being opened and a shift in export destination share towards

third country markets, particularly in South East Asia, notably the Philippines, Vietnam as

well as China and Japan. Securing market access to China has been of particularly benefit

given their demand for 5th quarter products which have been estimated to add 10% to the

value of a carcass.

Pigmeat production, both in Ireland and the EU as a whole is forecast to increase slightly in

the coming years, with per capita consumption also rising. The domestic market is the largest

individual volume outlet for Irish pigmeat. This has been underpinned by promotion of the

Bord Bia Pig Quality Assurance Scheme and growing consumer awareness of and loyalty to

the PQAS.

Specific Actions Planned:

Approved by the EU Commission and launched in October 2013, this Teagasc/IFA Pig Joint

Research and Advisory Programme is funded by a levy on each pig slaughtered and/or

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exported. Through the Joint Programme, Teagasc will support Irish pig producers by

providing advice, research and education across a range of issues of importance to the sector.

This work has commenced and will be extended in the near future.

The programme has enabled Teagasc to employ four additional advisors and researchers to

support producers and the sector through advice, research and education across a range of

issues of importance to the sector. Almost €230,000 was collected during 2013 and

commercial pig producers in Ireland will benefit from this initiative.

Ongoing research by Teagasc in areas such as profitability and competitiveness, carcase feed

efficiency, reducing piglet mortality, manure management and salmonella control are all

expected to deliver positive impacts for the sector.

Areas for further research include genetic progress, antimicrobial use, enhanced salmonella

control, loose farrowing systems options and methodologies for sharing knowledge and best

practice are also being considered by Teagasc.

The continuation and further development of marketing and promotional programmes by

Bord Bia will contribute significantly to putting the sector on a more solid footing. The Pig

Quality Assurance Scheme has greatly enhanced the positioning and placement of Irish

pigmeat in the domestic market.

All stakeholders, including DAFM, are part of a Pig Consultation Group which discusses

matters of interest which affect the sector.

Sustainability Considerations:

It is recognised that, as well as the ‘green’ benefits of sustainable production, it can often

deliver significant economic returns. Given the increase in input costs experienced by

producers in recent years, producers are seeking measures which could potentially minimise

such inputs. Measures to achieve better feed conversion ratios are being studied throughout

the EU and in Ireland with Irish researchers actively involved. At present models are being

tested by Teagasc which attempt to advance both pig and broiler chicken breeding

programmes for improved feed use efficiency, thus reducing feed costs and increasing

profitability.

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Challenges up to 2025:

The Irish pig sector competes in an international environment. Producers and processors face

ongoing challenges from both other EU and international competitors and they must

continually innovate and improve to maintain their presence in the international marketplace.

The research and targeted promotional work being carried out by a wide range of

stakeholders, together with the acknowledgement of the quality, sustainability and

competitiveness of Irish pigmeat, all combine to best position the sector to avail of the

opportunities presented.

The reliance on imported feeds poses a challenge for the pig sector in Ireland. The volatility

in cereal prices evidenced in recent years arises from a number of factors. The shift in

production towards ethanol has resulted in upward price pressure on quantities produced for

animal feed and human foodstuffs. Extreme weather events in recent years have led to

restrictions in output and a reduction in stocks although these have recovered somewhat since

last year. These issues, together with exchange rate fluctuations and significant increases in

transport costs, although falling in recent months, have made for difficult times for livestock

producers, who are among the largest consumers of cereals.

In addition, the ever-present threat of disease outbreaks and public health considerations,

underscore the ongoing focus on animal health and disease prevention and control strategies.

Included in the draft RDP is an on-farm capital investments scheme, TAMS II, with a

provision of €37m.  Amongst the areas identified for initial funding are investments on pig

farms for energy, water meters and medicine dispensers.   Other elements of the RDP, such as

targeted on farm animal health and welfare scheme will also be of benefit to the pig sector.

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Poultry Analysis 2025

Background Context:

The emphasis of Food Harvest 2020 is to achieve a 10% increase in value by 2020..

The Irish poultry industry consists of the rearing of birds for meat, the keeping of table-egg

laying flocks, a network of breeding flocks and hatcheries to support these activities, the

packing of eggs and the poultry slaughter and processing sector.

Approximately 800 farms are involved in commercial poultry production broken down

between 400 rearing poultry for meat, 230 involved in table egg production and

approximately 170 breeding farms and hatcheries. Following the closure of a number of

slaughter plants in recent years, there remains 7 export-approved plants, with six of these in

the northern half of the country. There are also a number of Local Authority approved plants

which slaughter product primarily for the domestic market. In total the industry supports in

the region of 6,000 jobs, primarily in rural areas.

The farmgate value of the poultry sector was in the region of €175m in 2013, with meat

accounting for €145m and eggs a further €30m. At just over 2% of gross agricultural output,

the sector’s share has declined slightly in recent years. The poultry sector has faced

considerable challenges in recent years with rising input and energy costs combined with

significant pressure from lower cost imports.

The predominant outlet for Irish chicken is the Irish retail market for fresh raw product.

While the majority of poultry meat sold at retail level is Irish, the vast majority of poultry

meat sold in the food service sector is imported. Given that Ireland is 111% self-sufficient in

poultry meat, the industry is not export driven, although hen meat and chicken cuts for which

there is a poor market here (wings, legs) are exported. In the current economic climate

consumers regard poultry as a value for money food and this has been reflected in a small

increase in consumption in the last few years. Export values grew by almost 4% between

2012 and 2013, reaching €230m last year.

Sectoral Goals:

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The emphasis of Food Harvest 2020 is to improve efficiencies and reduce costs such as

transport and energy to achieve a 10% increase in value target by 2020.

Future Market prospects:

It is expected that the domestic sector will remain under pressure from competitively priced

imports into the future.

While Ireland remains less than self-sufficient in poultry meat production, export

opportunities will not present themselves to the same extent as in other meats. However, a

growing understanding and utilisation of so-called 5th Quarter products, such as feet, together

with international demand for cuts which are not in demand domestically, will ensure the

continuation of export opportunities.

Specific Actions Planned:

A new Knowledge Transfer Programme for the poultry sector is planned as part of the new

Rural Development Programme. Poultry farmers who participate will be required to

collaborate with a facilitator in developing a Farm Improvement Plan. This plan involves the

completion of a Profit Monitor, Carbon Navigator, Herd Health Plan and Breeding Plan.

Following on from this, each farmer will attend 5 Knowledge Exchange Group meetings

annually in order to share best practice and knowledge.

Sustainability Considerations:

It is recognised that, as well as the ‘green’ benefits of sustainable production, it can often

deliver significant economic returns. Given the increase in input costs experienced by

producers in recent years, producers are seeking measures which could potentially minimise

such inputs. Measures to achieve better feed conversion ratios are being studied throughout

the EU and in Ireland with Irish researchers actively involved. At present models which

attempt to advance both pig and broiler chicken breeding programmes for improved feed use

efficiency, thus reducing feed costs and increasing profitability are being tested by Teagasc.

Challenges up to 2025:

The poultry sector in Ireland is small scale and highly vertically integrated from breeding

stock to final processing. The sector has consolidated in recent years with the number of

commercial operators declining. Input costs, both of a feed and non-feed nature pose a

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considerable challenge, together with significant competition from imports. The size of

enterprises in Ireland makes it difficult, in the main, to avail of economies of scale. It

competes with international enterprises which are many multiples in size and which

consequently, can produce large volumes of product at lower marginal cost. The sector has

benefited in the past from a number of support initiatives, most notably the provision of

capital investment grants to assist in compliance with welfare regulations, and ongoing Bord

Bia promotional campaigns and the development and operation of the Bord Bia Poultry

Quality Assurance Programme (PQAS).

In addition, the sector is vulnerable to cheaper imports from countries such as Thailand and

Brazil which is re-constituted in the Netherlands and Germany on arrival in the EU. The lack

of country of origin labelling regulations for poultry can cause particular difficulty for Irish

processors given their reliance on the domestic market and the presence of a large multi-

national producer in Northern Ireland.

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