Sheep farm costs of production to rise by 12% – report

A shortage of forage will be the main driver of increased input expenditure on Irish sheep farms this year, according to the recent Teagasc Situation and Outlook July 2018 report.

The Department of Agriculture reports that feed usage climbed by 18% on sheep farms during the first quarter of 2018, while Teagasc forecasts an increase in concentrate feed usage over the year as a whole of 15%.

Owing to substantially higher input prices, the report outlines that total costs of production per hectare are expected to increase by approximately 12% in 2018.

However, higher lamb prices for the year-to-date are helping somewhat to offset these higher costs, with Teagasc showing that Irish lamb prices have averaged over 10% higher than in 2017.

Despite the seasonal reduction in lamb prices, the research and advisory body forecasts that average prices for the year as a whole will remain higher than in 2017.

With rising costs largely offsetting higher output prices, Teagasc’s forecast is for relatively stable gross margins on a per hectare basis on mid-season lowland lamb enterprises.

Mid-season lowland lamb gross margin per hectare 2015-2017 and forecast for 2018

However, gross margins for these enterprises are forecast to be approximately 1% lower than those earned in 2018, while net margins are set to decline by 8% on 2017 levels, the report outlines.