A modest increase in lamb prices is forecast for 2024, as specified in the Teagasc Outlook report for 2024 published today (November 28, 2023).
This increase, coupled with a slight easing in costs, will result in higher margins on sheep farms in 2024, according to Teagasc.
Payments to farmers participating in the Sheep Improvement Scheme (SIS) will continue to boost the value of gross output and margins per hectare on sheep farms in 2024, as the additional €8 per ewe differential was factored into the forecast for 2024.
As a result of the SIS payments, net margin/ha for the average sheep enterprise is expected to increase in 2024 to €263/ha, a 42% percent increase on the 2023 net margin of €186/ha.
With lower ending ewe numbers forecast for 2023, Teagasc predicts lamb production in 2024 in Ireland will decline in 2024 by circa 2%.
In 2024, Irish lamb prices are forecast to increase modestly by circa 1%, as high prices continue to prevail in the EU and supplies remain tight.
The average income on sheep farms in 2024 is forecast to increase by 8% on 2023, bringing the average income to about €18,300 (up from €17,000 this year).
Teagasc outlook
Tight global markets for sheep meat and export demand for Irish sheep are forecast to support Irish lamb at close to current price levels in 2024.
With lower costs of production continuing into 2024 year and a modestly positive lamb price outlook, Teagasc expects gross margins for mid-season lowland lamb enterprises in 2024 are to increase by 9%.
In 2024, the average gross margin/ha earned by Irish mid-season lowland lamb enterprises is forecast to increase to €982.
Teagasc noted in its Outlook 2024 report that there is an expectation a slowdown in slaughterings in the second half of 2023 will result in a small production decrease of circa 1.8%, followed by a somewhat lower forecasted decline for 2024 year of circa 1%.
EU consumption of sheep meat is expected to suffer from inflationary pressures, but its positioning for cultural and religious festivals gives it an advantage.
Costs
The outlook for input expenditure in 2024, from the perspective of Irish sheep farmers, is also more positive than in 2023, according to Teagasc.
Prices of the majority of the key inputs in sheep production are forecast to either remain relatively constant or decline slightly, with electricity, fertiliser and concentrate feed prices being just some of the inputs forecast to decrease in 2024.
Input volumes used in 2024 are forecast to remain unchanged (on a per hectare basis), but total costs on Irish sheep farms are forecast to decrease by 3% in 2024.
Direct costs of production are forecast to decrease by circa 8%, while overhead costs of production are forecast to remain relatively unchanged, relative to 2023.
The Outlook 2024 report predicted concentrate feed prices are forecast to decrease modestly in 2024, by circa 1%, but the volume of feed use is forecast to remain comparable with 2023 levels, a year in which volume used also decreased by circa 5%.
According to Teagasc, concentrate feed is required to meet the earlier additional Easter demand expected in 2024, a year in which Easter is celebrated slightly earlier in the month of March, rather than in April as in 2023.
The price of fertiliser is forecast to decline further in 2024, following price declines in 2023 year, reversing some of the substantial increases experienced in earlier year.
Overall, pasture and forage costs on Irish lowland mid-season lamb enterprises are forecast to decline in 2024, by almost one third.
The Teagasc outlook for lamb prices in 2024, coupled with a forecast decline in sheep output/ha, with a forecast decline in direct costs of production leads to a forecast of a higher gross margin in 2024 than in 2023.
Total overhead costs for the average mid-season lamb enterprise are forecast to remain relatively stable in 2024 which augments the forecast decrease in direct costs.