Only 24% of Irish sheep farms are ‘viable’ – Teagasc

Only 24% of sheep farms in Ireland are ‘viable’ according to Teagasc. The National Farm Survey revealed, of the 12,758 sheep farms represented, 41% are categorised as ‘vulnerable’.

The average market income figure for the sector indicates little or no profit is being made from production on these farms.

The average sheep farm income was €16,011 in 2016, dropping by only 1% on the previous year.

Sheep farms had an average flock size of 133 ewes, with an average farm size of 51ha. Livestock units per hectare was, on average, 1.07.

Across all sectors, sheep farms had the lowest average income per hectare, at €311/ha.

Viability

According to Teagasc, only 24% of sheep farms in Ireland are ‘viable‘ – farm income can remunerate family labour at the minimum agricultural wage and provide a 5% return on the capital invested in non-land assets.

34% of farms are ‘sustainable‘ – the farm business is not viable. However, the household is still considered sustainable because the farmer or spouse has an off-farm income.

The remaining 41% are categorised as economically ‘vulnerable‘ – the farm business is not viable and neither the farmer nor spouse work off-farm.

sheep farms
Source: Teagasc

2016 saw a slight decline in total farm gross output, dropping by 2%.

Lamb prices were down 2% year-on-year, according to Teagasc. Direct payments increased marginally by 1%.

Direct production costs increased by 5% on the average sheep farm. Increases in feed and veterinary costs were offset by a reduction in fertiliser expenditure.

Overhead costs were down by 9%, resulting in a 2% decline in total costs for the average farm in 2016.

Direct payments

The average sheep farmer in Ireland is completely reliant on direct payments; support payments contributed 111% to farm income. Farmers received an average direct payment of €17,726 in 2016.

Average market income – income before direct payments – was in the negative, at -€1,715; indicating that, on average, no profit from production is made. Rather, production on these farms is eating into direct payments received.

The Basic Payment Scheme (BPS) made up 70% of the direct payments received by sheep farmers. Disadvantaged area and environmental schemes made up the majority of the remaining percentage, 14% and 11% respectively.

Investment and borrowings

Sheep farmers invested, on average, €4,166 per farm – down slightly on the previous year. The sheep sector was the enterprise with the least amount of new farm investment in 2016.

23% of sheep farms had borrowings in 2016; with an average debt of €54,517 per farm. While only a small proportion of farmers have borrowings, the average figure is relatively high.

Sheep farms have a debt-to-income ratio of 2.08; the highest across all farming enterprises.

Distribution of farm income

Only 4% of sheep farms in Ireland earned more than €50,000 in 2016. However, the proportion of farmers in this income category is rising marginally year-on-year.

48% of sheep farmers earned an income of less than €10,000; while the same percentage earned between €10,000 and €50,000.

Almost a quarter of sheep farmers earned less than €5,000 in 2016.

On an income per labour unit basis, the average sheep farm income drops from €16,011 to €14,424, representing 1.1 unpaid family labour units employed on farms.

sheep farms
Source: Teagasc