Mid-season lamb producers top of the flocks
Positive trends in outlook set to continue for mid-season lowland lamb producers in 2019, writes Anne Kinsella
Historically, there has been a wide range in farm profitability. That range continues to persist, and sheep farms are no exception. In this article, the focus will be on mid-season lowland lamb enterprises, the most predominant lowland sheep system.
In this analysis, farms are assigned to three equally sized groups, termed least profitable ('Bottom'), average ('Middle') and most profitable ('Top'). The average levels of output, direct costs, gross and net margin per hectare and indicators of technical performance across these three groups can then be compared.
In 2018, mid-season lowland lamb producers did not lose as much as other grassland systems. While marketed output value was higher (as a result of higher lamb prices and the receipt of payments from the Sheep Welfare Scheme), input expenditure was up strongly, particularly feed input expenditure which was up over one third.
Despite the large increase in input expenditure which eroded the higher output value, mid -season lamb farms managed to maintain their margins just short of margins earned in the previous year. Indeed the majority of mid-season lamb farms remain categorised in the positive net margin category. Based on analysis as presented at the Outlook conference last month, a more positive margin outlook for 2019 is forecast. Gross margins earned by the average mid-season lamb enterprise in 2019 will increase relative to those estimated for 2018, due largely to significantly lower costs of production as concentrate feed usage returns to normal levels.
Welfare scheme payment
In 2019, margins earned on the mid-season lowland enterprises will continue to be boosted by the receipt of the coupled Sheep Welfare Scheme payment.
While, on average, the gross margin for the mid-season lamb enterprise is forecast to be circa €765/ha in 2019, a 10pc increase on 2018, there exists great variability between the three ranked groups. Gross margin for the Top group is forecast at just over €1,200/ha compared to gross margin for the Bottom group, forecast circa €300/hectare. Top producers earn, on average, four times more per hectare than their counterparts in the Bottom group.
The large variation in gross margin earned per hectare is also reflected in variation in net margins earned.