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Production costs for sheep farms to increase by 12% – report

Production costs for sheep farms to increase by 12% - report

A forage shortage will be the main driver of increased input spending on Irish sheep farms this year, according to the recent Teagasc Situation and Outlook report from July 2018.

The Department of Agriculture reports that feed use increased by 18% in sheep farms during the first quarter of 2018, while Teagasc predicts a increased use of concentrated foods over the whole year by 15%.

Due to significantly higher input prices, the report says total production costs per hectare are expected to increase by around 12% in 2018.

However, higher lamb prices since the start of the year are helping to offset these higher costs somewhat, with Teagasc showing Irish lamb prices have increased by more than 10% on average from 2017. .

Despite the seasonal decline in lamb prices, the research and advisory body predicts that average prices for the full year will remain higher than in 2017.

With rising costs more than offsetting the rise in production prices, Teagasc’s forecast is relatively stable gross margins per hectare on mid-season lowland lamb farms.

Mid-season plains lamb gross margin per hectare 2015-2017 and forecast 2018

However, these companies’ gross margins are expected to be around 1% lower than those achieved in 2018, while net margins are expected to decline by 8% from 2017 levels, the report said.

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