Micheál Martin (Cork South Central, Fianna Fail)
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Question 14: To ask the Minister for Agriculture, Food and the Marine the steps he will take to address the instability in the sheep market; and if he will make a statement on the matter. [28533/12]

Simon Coveney (Cork South Central, Fine Gael)
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The market performance of the sheep sector, in common with other agricultural sectors, is a function of supply and demand. The long-term future of the sector will depend on its ability to satisfy the market and in order to do this well, it much focus on competitiveness, innovation and the demands of the consumer. Food Harvest 2020 sets a target of 20% increase in output value for the sheep sector by 2010 and envisages that over the coming years demand for sheepmeat on the European market will outstrip production levels which should 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 which has been evident in recent years.

The recommendations of the report focus on farm competitiveness and the processing sector. On the farm side, they emphasise the importance of the continuance of the application of on-farm labour efficiencies and new technologies, breed improvement and the production of a quality product. On the processing side, the focus is on efficiencies, innovation and improved product range.

While the recent decline in lamb prices gave cause of concern, it should be noted that this is broadly following the usual seasonal pattern. As we enter June, prices traditionally decline as the influx of new season lambs suppresses prices. The notable point for this year is that this seasonal pattern appears to have occurred earlier and suppressed prices for a number of weeks in May rather than the beginning of June. The main reasons for this were:

· Lower demand in export markets, particularly in France;

· Farmers had been retaining hoggets in the expectation of an improvement in prices. When the price improvement didn't materialise, this meant a lot of extra hoggets were delivered to the factories at the same time, which had the effect of reducing the average price.

· The sector did not get as big a lift from the new season lambs as in previous years.

On the positive side, the market seems to have corrected itself and there are signs of stabilisation. The weather over the coming months will influence the demand for mid-season lamb and good weather on the continent should have the effect of boosting demand and hence prices.

In light of the recent fall in producer prices during the month of May and following consultation with the industry, Bord Bia brought forward its summer lamb promotion campaign to commence on 5thJune. m Furthermore Bord Bia has strengthened the TV advertising element of the campaign, by extending its duration from 3 to 4 weeks. There has been significant public investment in the sheep sector in recent years. Key supports for this sector include €7 million from the 2009 Single Farm Payment National Reserve under the Uplands Sheep Payment Scheme and €54 million for the three-year Grassland Sheep Scheme which commenced in 2010. The grassland Sheep Scheme is proving to be a valuable support mechanism in terms of improving income and confidence in the sector. The sheep fencing/mobile handling equipment scheme, which is one of five Targeted Agricultural Modernisation Schemes (TAMS), was re-opened to applications last December and the first tranche closed in February of this year. This Scheme will 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. All of the supports I have outlined have provided a significant incentive to farmers to maintain their production levels, which is vital for the future of a viable sheep industry in Ireland.

In addition Teagasc has allocated almost €1.5 million for sheep research for 2012. Bord Bia will also spend over €1.1 million this year on a promotional strategy for the Irish sheep sector which addresses the issue of safeguarding the future of the sector in the following ways:

· By encouraging Irish consumers to buy more Quality Assured lamb.

· By collaborating with its French and English counterparts in a campaign to reverse the decline in consumption of lamb on the French market, which accounts for over 50% of our exports.

· By working with individual exporter to increase the amount of exports to higher value markets such as Germany and Scandinavia and thereby reduce Ireland's dependency on the French market.

I very much welcome the fact that the declining trend in numbers in our national flock is showing signs of reversal and our sheep numbers are now increasing. This reflects a growing sense of confidence amongst sheep farmers in terms of rebuilding breeding stock numbers which will ultimately lead to an increase in throughput. Whilst it is still too early to provide an accurate estimate for the 2012 lamb crop, it is estimated that it will be up in the order of 1-2%.

On another positive note, sheep meat exports to International markets almost doubled to 600 tonnes during the course of 2011. This generates a great confidence boost for Irish exporters. While almost 99% of our lamb exports are to the EU, it is always beneficial to have a wide range of outlets available and to this end my Department, together with Bord Bia and the Department of Foreign Affairs and Trade continues to work to secure access to more third country outlets for Irish lamb.