Sheep farms are in crisis because current market prices do not reflect “higher production costs on farms”, the Irish Farmers’ Association (IFA) has warned today (Wednesday, January 11).
Kevin Comiskey, chair of the IFA’s national sheep committee, has strongly criticised factories for further cuts on lamb prices.
Comiskey said the weakening of lamb prices at a time when production costs are at an all-time high “is not acceptable”.
He detailed that factories were “imposing weight cuts on lambs in an attempt to flatten prices” and said this sent “negative messages” to farmers committed to finishing lambs.
“Factories have failed to provide strong and meaningful prices to farmers who have invested in finishing lambs throughout this period and this week in particular which only serves to undermine confidence in the sector,” Comiskey added
The IFA sheep chair has stated that input costs on sheep farms have increased in the past 12 months by over 40%.
Comiskey said sheep farmers do not have the capacity to absorb this level of cost.
According to the IFA “direct payments make up over 100% of farm family income (FFI) on sheep farms and farmers are becoming increasingly unviable in the sector with current prices”.
He voiced his concerns today that dependence on payments to maintain a livelihood would get worse against the backdrop of a forecast 20% reduction in market returns.
According to latest IFA figures factories are paying up to €6.50/kg for lambs, with higher deals for groups and larger lots. Cull ewes are ranging from €3.20/kg to €3.50/kg.
Sheep sector in crisis
Comiskey said these prices do not not reflect the “enormous input cost increases of over 40% over the past 12 months”.
“The sheep sector is in crisis. The store lamb trade, particularly lighter stores, are under severe pressure.
“Farmers who bought stores some months ago are not getting the market returns needed and all sheep farmers face a critical income situation,” he stated.
Comiskey said the IFA had previously highlighted its concerns about the sector to the Minister for Agriculture, Food and the Marine, and pointed to analysis contained in the Department of Agriculture, Food and the Marine’s annual review and outlook for 2022 as further proof of the underlying crisis facing sheep farmers.
The report warned of “increasing global competition” and that a “significant gap between the EU prices and the prices in New Zealand and Australia will remain”.
“In an environment of increasing inflationary pressures in the Eurozone area, due to rising feed, grain and energy prices, margins will remain tight,” it stated.
Teagasc has also forecast that margins from sheep production will decline further this year with “current prices insufficient to cover the increased costs of production”.
The IFA sheep chair refenced the 2023 forecasted feed price which he said were likely to increase by a further 10% while other direct costs are predicted to increase by 4% in 2023.
The IFA is now calling for “immediate direct supports” including a targeted payment for farmers finishing lambs and a €30/ewe payment.
Comiskey said that the minister “cannot shy” away from supporting what he described as Ireland’s second-largest farm sector.
Vital economic activity
He said in some of the most rural parts of the country sheep farming “is the only source of vital economic and social activity” and he believes it contributes to environmental objectives and drives biodiversity.
Comiskey said factories must do more to support sheep farmers and ensure all costs associated with finishing lambs are “reflected in prices paid to farmers to maintain confidence in the sector”.