The UFU Beef and Lamb Committee met this week to discuss a range of issues including the current status of Northern Ireland’s lamb trade and in particular the difficulties being experienced with cross border trade to the Republic of Ireland.
Prices for hoggets’ have fallen from 410p/kg to 350p/kg this week and the price for spring lambs has dropped from 460p/kg to 420p/kg in recent weeks as well.
One of the main issues which is having an impact on sheep prices is the changes to EU labelling laws which came into force on the 1st April for pork, lamb and poultry. This legislation has not placed a complete halt on cross border trade but it has created uncertainty in the market as the industry tries to seek clarification from Government on what the legal implications are.
In order for these commodities to comply with this new country of origin labelling the country where the animal was reared and slaughtered must be declared. These laws were originally designed to help protect both consumers and farmers by ensuring that what was being sold on retail shelves carried compulsory labelling describing the true country of origin of the product.
While to a degree this has been a positive step, one of the unintended consequences of this is that it has had an impact on cross border trade for farmers as well as trade between processors and retailers.
As beef producers witnessed last year, country of origin labelling also had an impact on their trade.
Labelling legislation for beef is different in that the label must clarify where the animal was born, reared and slaughtered. UK retailers made it clear that they did not want to buy beef which has been born in Republic of Ireland and reared and slaughtered in Northern Ireland because they believe a mixed region label is confusing for consumers. UK retailers believe that a single country of origin label offers much more clarity to the consumer.
Ultimately, whether Republic of Ireland plants will want Northern Ireland lambs or not will depend on their end customer and whether they specify country of origin labelling as a requirement. As yet it is very unclear as to whether major lamb customers within Europe specify country of origin labelling within their specification.
This is something the industry must urgently get clarity on as well as whether there are any alternative labelling options within the relevant legislation.
Ultimately the overriding factor which is causing the greatest problem is the Euro-Sterling exchange rate. Usually at this time of year we see an upturn in hogget and lamb prices driven by short supply and competition from Republic of Ireland plants, however the Euro has not been this weak in the month of April since 2007 and is 13% down on this time last year, making it very difficult for UK red meat to trade in the Eurozone.
With Republic of Ireland being the main market for heavy hoggets, the weakness of the Euro and the uncertainty with the labelling issue is reducing marketing options for farmers in the north as local plants will only pay for hoggets to 22kg. Again the weight limits set by plants will be dependent on what the final customer wants so it is essential that farmers carefully identify who they want to sell to.
The UFU has been monitoring this issue over the last two weeks, and has been in regular contact with DARD, producers and processor representatives from both NI and Republic of Ireland to gain a better understanding of what is happening in the market place.
Next Monday the UFU will meet formally with the IFA, with further discussions with processors and Government required urgently. The UFU will also be meeting with UK retailers at Balmoral Show to stress the importance of their support for local livestock producers.