2022 is set to be a challenging year for sheep farmers, with input costs set to erode any potential margins to be made, according to Anne Kinsella of Teagasc.
Anne, who was speaking at the Teagasc 2022 Outlook Conference, said that on sheep farms, feed costs are expected to increase by 6%, fertiliser costs to increase by 120%, while expenditure on contract charges is expected to increase by 10%.
Anne said these combined overall are expected to see pasture and forage costs forecast to increase by up to 70% in 2022, and that these costs comprise 30% of the total costs on sheep enterprises and will result in total sheep costs rising by 14% in 2022.
She added: “This will impact hugely on sheep farms. Although the forecast is that output/ha will increase marginally by 2% relative to the levels estimated the previous year, our assessment is that, given the less positive outlook for lamb prices in 2022, it will not be sufficient to maintain margins which will be eroded by the higher input costs.
“The average gross margin earned is forecasted to decline by 15% to €634/ha, while the net margin/ha is expected to decrease by 62% to stand at €88/ha.
“Margins earned will be boosted by the receipt of payments from the Sheep Welfare Scheme (SWS).
“It is important to note that continental markets account for the majority of Irish lamb. And although economic disruptions from the pandemic continue to impact consumer demand, solid fundamentals will continue to support demand for Irish sheepmeat into 2022.”
Anne’s presentation was based on a lowland sheep system on farms with greater than 20 breeding ewes.
