Ongoing Eurozone recession to weigh on demand for lamb – Teagasc

Incomes on sheep farms are set to be unchanged next year according to Teagasc.

In its Outlook for 2015 it says Irish and EU lamb prices should be characterised by stability in 2015 , but there are important downside risks due to the weakness of EU demand.

‘While lamb supplies are expected to remain tight, demand for lamb is set to remain weak given the continuing recession across much of the Eurozone,’ according to Teagasc economist Dr Kevin Hanrahan.

Teagasc says despite reduced third country lamb imports in to the EU and stable to contracting EU supplies of lamb, prices are not forecast to increase in 2015 due to forecast contraction in demand for lamb on EU markets.

In terms of inputs Teagasc says sheep feed expenditure is forecast to decline in 2015.

It says sheep feed is mainly consumed in the first half of the year. Even though feed prices are forecast to rise in the back end of 2015, prices in the first half of 2015 are forecast to be below prices in the same period of 2014. Fertiliser prices are also forecast to increase in 2015.

With slightly higher costs of production in 2015 and lower output value – because of the decoupling of the Sheep Grassland Scheme payment from sheep production Teagasc says gross margins for mid-season lowland lamb enterprises in 2015 are forecast to decrease by 9%.

It says in 2015 the average gross margin per hectare earned by Irish mid season lowland lamb enterprises is forecast to be €593 per hectare.