Sheep farmers in the Republic are benefiting from the foot-and-mouth crisis in the UK, with prices currently 35 per cent higher than last year, Teagasc has estimated.
Beef farmers, however, are continuing to struggle due to the BSE crisis, said the agricultural agency.
Mr Gerry Scully, Teagasc chief sheep adviser, said: "It is shaping up to be a very good year for sheep farmers". This is provided foot-and-mouth can be kept out of the State.
There are 39,000 sheep farmers in the State, and 75 per cent of lambs are exported annually.
The "vast bulk" of sheep are exported to France, where the State's main competitor is normally the UK. Exports have been banned from the UK due to its foot-and-mouth crisis.
"At present, there are no sheep from the UK going to France - and this is likely to continue until August," said Mr Scully.
The UK has also culled 1.2 million sheep in the crisis, one third of its national herd. This has helped boost sheep prices, which Mr Scully estimates will be "20 to 25 per cent higher" until the end of the year.
He said if fresh outbreaks of foot-and-mouth arise in the State, export markets would be closed, making "sheep meat effectively worthless".
Figures from the Department of Agriculture show 49,164 sheep were culled in Co Louth after the recent outbreak at Proleek. Elsewhere in the State, 5,257 sheep have been slaughtered.
However, the situation remains bleak for beef farmers, who continue to face the medium to long-term threat of BSE.
Furthermore, Bord Bia figures show the adverse effect of foot-and-mouth on sales of beef in the UK.
For four weeks up to April 1st, beef sales in the UK decreased by more than 15 per cent, and were almost 17 per cent lower than February, before the initial outbreak of foot-and-mouth.
However, a spokesman for Teagasc said the financial burden on beef farmers would be eased by an increase in direct payments.