Income on sheep farms was boosted by 8pc last year as a result of a 17pc increase in lamb price from 2009 to 2010 and the introduction of the sheep grassland payment, worth €9.20/ewe.
Despite this improvement, a question mark still hangs over the viability of many sheep farms in Ireland, with the average one losing money before direct payments are received.
Average family farm income (FFI) on sheep farms last year was €11,586, according to the National Farm Survey. However, the actual market returns from selling sheep was not enough to cover the costs of producing them, the survey found.
Teagasc analysis shows that just over one-quarter of sheep farms are economically viable in their own right, while the rest are either economically vulnerable or sustainable only if there is another off-farm source of incomes.
Interestingly, FFI on hill sheep farms exceeded the average of all farms by almost €6,000 last year, with an average FFI of €17,240 for the year.
With more than 17,000 sheep farmers in the country, less than a fifth are classified as full-time.
Sheep farmers had the lowest level of on-farm investment across all the sectors last year, spending, on average, just €2,450 per farm.