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Sheep Farm Margins to be Third Lower For Irish in 2015

03 December 2014

IRELAND – A harder year lies in wait for Irish sheep farmers, according to latest predictions.

This is despite supplies expected to remain tight within Europe in 2015 because of decreasing demand, say market analysts at Teagasc.

Operations should expect average gross margins of €593 per hectare, not helped by the decoupling of the Sheep Grassland Scheme. This is down from 2014 margins of €651 per hectare.

Average net margins will be 32 per cent lower from 2014's calculated values.

This is for mid-season lowland businesses, which will see gross margins contract nine per cent.

Lower EU output will contract further, with Teagasc ruling out any spike in imports, leaving “stable to contracting” lamb supplies.

Chart reproduced courtesy of Teagasc

Meanwhile, production costs, which have been lower this year, will creep up, largely due to higher fertiliser prices.

Feed prices are set to drop further from highs of the 2012/2013 winter and the forage crisis.

This follows a better year for Irish and European lamb in general, spurred by lower production costs on the previous year.

Summarising the cost outlook for 2015, Kevin Hanrahan and Anne Kinsella at the Agriculture Economics and Farm Survey Department said gross margins will be lower as prices remain “unchanged”.

“On the basis of our analysis of future contract prices for crude oil, fuel costs are expected to fall slightly in 2015,” they wrote in Teagasc’s Annual Review and Outlook 2015.

“Other fixed costs are forecast to decrease marginally in 2015.”

This means net margins will fall over 30 per cent.

“With at best stable lamb prices, higher direct costs, and slightly lower overhead costs (that on average in 2015 are estimated to be €477 per hectare) average net margins per hectare from sheep production are forecast to decrease in 2015.

“Assuming that the share of overhead costs allocated to the mid-season lamb enterprise is unchanged in 2015, average net margins (exclusive of the now decoupled sheep Grassland Scheme payment) per hectare are set to fall over 32 per cent from the levels estimated for 2014 to €116 per hectare in 2015.”

Michael Priestley

Michael Priestley
News Team - Editor

Mainly production and market stories on ruminants sector. Works closely with sustainability consultants at FAI Farms.

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