According to Teagasc’s Annual Review and Outlook 2019 report for the sheep sector, the average gross margin earned by mid-season lamb producers in 2018 declined by 3% compared to that earned in 2017.
In addition, it says that the direct payment associated with the Sheep Welfare Scheme is estimated to have mitigated the negative impact of the poor weather on incomes.
Teagasc says that in the absence of this coupled payment, the estimated decline in gross margins – compared to 2017 – would have been closer to 13%.
Therefore, the average gross margin for the average mid-season lamb producer in 2018 was €693/ha.
During a typical year, the main direct costs of production for Irish sheep farms are associated with purchased concentrates, pasture and winter fodder.
However, these costs were elevated due to the extreme weather during 2018 which resulted in significantly reduced grass growth on most sheep farms across the country.
Average income on mainly sheep farms. Source: Teagasc
Concentrate usage
According to Teagasc, purchased concentrates typically account for 40% of total direct input costs on the average mid-season lowland sheep farm.
However, due to the limited grass supplies the volume of concentrate used on the average farm increased by 28%.
Teagasc estimates that for 2018, concentrate feed purchases accounted for over 50% of the total input costs. This is due to the increase in the volume of concentrates used, coupled with a 5% increase in concentrates price.