Sheep decline - productivity has dropped over last 25 years
Ireland is the fourth biggest sheep meat exporter in the world but new figures show the industry has been in a state of decline for 25 years
In 1990, the country was glued to the exploits of Jack's Army in the World Cup in Italy, Charlie Haughey was Taoiseach, the price of a pint was €1.93, and the average weekly wage was €282. It was a generation ago and Ireland is a very different place now, but what has changed in the sheep sector during the same period? In this first part of a series, Teagasc's Tim Keady and Kevin Hanrahan uncover some shocking facts.
While the sheep sector may not be seen by many as a farming powerhouse on these shores, Ireland is not only the fourth largest sheep meat exporter worldwide, but also the biggest net exporter in the EU.
Currently Ireland is 335pc self-sufficient in sheep meat. The value of sheep meat output is approximately €250m, with about €230m of that exported.
Teagasc National Farm Survey (NFS) shows that, contrary to the perception that sheep is a mainly part-time enterprise, some 70pc of sheep farmers do not have an off-farm source of income. Despite their dependence on the sector for an income, the productivity of sheep farmers has actually declined in the last 25 years.
Before getting into why this has happened, let's get a complete overview.
Currently there are 2.5m ewes in the national flock which is the same number as in 1985. However, the size of the national ewe flock has declined dramatically since its peak of 4.8m in 1992, before it reached its nadir in 2010 of 2.35m (Figure 1). The national flock size has remained relatively stable since. While there are no less than 34,254 farms across all counties producing lamb, the number of flocks has also declined over the last 25 years, with approximately 15,000 fewer farms with a sheep enterprise in 2015 as compared to 1993. The average flock is 73 breeding ewes, with only about one third having more than 100 ewes.
The highest concentration of sheep numbers is in counties along the western seaboard and in the uplands along the east coast. Donegal has the most sheep, followed by Galway, Mayo and Kerry, while Limerick has the smallest numbers.
The Suffolk and Texel breeds are the two main terminal sire breeds and they account for 61pc of the sires of the national ewe population. In the early 1990s, Suffolk-cross and Texel-cross ewes accounted for 46pc of the national ewe flock, therefore these breeds are increasing in popularity.
However, in the survey completed in 2006, it was interesting to note that the proportion of ewe lamb replacements derived from Suffolk had declined to 51pc whilst the proportion represented by Belclare-cross was 10pc.
The Scottish Blackface and Cheviot are the predominant breeds on the hills of the western seaboard and east coast respectively. Based on the figures collated in the 2006 survey and presented in Table 1, it is estimated that 86pc, nine per cent and five per cent of national lamb carcass output was derived from lowland, Cheviot and Scottish Blackface flocks respectively.
Sheep meat exports
The vast majority of Irish production is exported, with the domestic market accounting for less than seven per cent of output and Ireland is the largest net exporter (exports less imports) of sheep meat in the EU.
France and the UK are our principal markets for sheep meat and account for 36pc and 26pc of sheep meat exports, respectively; Sweden, Belgium and Germany each account for eight per cent. Only five per cent of Irish sheep meat exports go to non-EU markets. Whilst most Irish sheep meat was exported in carcass form in the late 1980s, only 25pc of sheep meat exports are currently exported in this form - most exports are now in the form of fresh or chilled cuts, either deboned or bone in.
The sheep output index in 2015 was 35pc higher than in 1990. However, the growth in nominal price does not necessarily reflect an improvement in profitability. To assess how the real returns to sheep production have evolved, account must be taken of how the price of inputs to production of sheep have evolved. The real sheep price index presented in Figure 2 takes account of developments in the costs of agricultural production and shows that the real price of sheep output by the sector has not improved since 1992, with the increases in sheep price matched by increases in the input price farmers have paid over the last 25 years. To improve profitability in the face of stable real prices requires improvements in productivity.
Productivity at farm level
The main objective of a sheep enterprise is to produce lamb meat for the market. The two main factors influencing the quantity of lamb carcass produced per hectare is stocking rate and the number of lambs weaned per ewe joined.
Productivity performance over the 20 year period analysed has declined at farm level. This decline in performance is reflected in a reduction in the average stocking rate of 12pc (one ewe/ha), whilst there has been no improvement in the number of lambs weaned per ewe joined. The lack of an improvement in the number of lambs reared per ewe joined may be indicative of the increase in ewe numbers from terminal sire breeds that have an inherently low prolificacy.
Whilst the mean gross margin on all lowland sheep farms over the past three years was €590/ha, the gross margin earned across the population of lowland lamb enterprises varies dramatically. The gross margin for the top third and bottom third of sheep producers (when ranked on the basis of gross margin per hectare) was €971 and €232/ha, respectively.
This large difference in profitability was mainly due to large differences in lamb carcass output. Relative to the bottom third of sheep producers, the top third of sheep producers weaned an extra 4.9 lambs/ha due to a combination of higher stocking rate (an extra 2.4 ewes/ha) and the greater number of lambs weaned per ewe joined (an extra 0.22 lambs). The very large degree of variation in income levels among sheep producers clearly demonstrates that there are opportunities within the farm gate that are under the control of the producer, to increase profitability. Individual farmers have little or no control of what happens outside the farm gate except to negotiate the best price for animals sent for slaughter.
Efficiency within the farm gate
Producers have full control of factors that are within the farm gate and can use these to significantly alter their own destiny. For example, whilst the mean number of lambs reared per ewe joined in lowland flocks is 1.3, the top five per cent of producers achieve 1.7 lambs weaned per ewe joined.
The key factors that affect production efficiency, and thus profitability, are ewe genotype, grassland management, silage feed value and thus nutrition during pregnancy, season of shearing, nutrition during pregnancy and management prior to joining.
These and other issues relevant to efficient prime lamb production will be examined in a series of articles over the coming months.
Dr Tim Keady and Dr Kevin Hanrahan are based in Teagasc Athenry.
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