Last year was a good year for the Irish Farmers Journal beef and sheep demonstration farm in terms of financial performance.

The farm operates a herd of 90 suckler cows and 250 mid-season lambing ewes on 80ha just outside Tullamore in Co Offaly. Bulls are finished as under 16-month bulls with heifers sold as in-calf heifers at 18 to 19 months.

The clear message on the day was that a well-run technically efficient beef and sheep farm can deliver a decent margin in an owned farm situation.

A rise in beef and lamb prices, coupled with what we would now describe as low prices of €300/t for fertiliser and €260/t for finishing ration meant that the farm delivered a gross margin of €1,381/ha in 2021. Bull prices were up €287/head in 2021, heifer prices were up €500/head and lamb prices were up €25/head.

Tullamore Farm is unique in that it rents 100% of the land, pays for full labour and pays an interest charge on borrowed money to set up the project. These three figures come to €112,403 and when all costs are accounted for, the farm lost €55,371 in 2021. The farm has no basic payment.

Table 1 outlines a scenario where the farm is owned, own labour is used and a basic payment of €22,880 (€286/ha) is added to the bottom line.

We see that the farm could deliver an income of €79,912 (€999/ha) after all variable and fixed costs have been paid excluding land, labour and interest.

This would be available to the farmer as a living wage, to pay any extra labour required and to repay any loans on the farm.

Taking a look at the sheep and cattle performance on the farm in 2021 we see that the cattle system delivered a gross margin of €1,611/ha, while the sheep enterprise delivered a gross margin of €810/ha when support payments like ANC, BDGP, BEEP-S and SWS payments are included.

A recovery in the gross margin of the sheep system is expected in 2022. These payments amounted to €19,318 for the farm in 2021. Interestingly, support payments to the cattle system totalled €296/ha, while supports for the sheep system totalled €107/ha in 2021.

Planning ahead

Looking ahead to 2022, the financial performance will take a hit with feed costs rising by 41% and fertiliser costs rising by 178%. It’s estimated that an extra €33,000 will be spent on fertiliser and feed on the farm in 2022.

This is along with other increases for contractor charges, diesel/energy and veterinary costs.

Looking at sales output in 2022, the farm is likely to sell an extra €22,000 worth of animals so, at the moment, it looks like margins will take a hit in 2022.

The farm has a plan in place to reduce costs. One of these measures is reducing fertiliser applications by 15% and concentrating more on clover swards to fix nitrogen, especially in the second half of the year.

A red clover sward has also been recently sown to try and reduce concentrate input in the bull system.

The farm has also adopted a range of other measures like high replacement index genetics, two-year-old calving, improving soil fertility and is working to a biodiversity plan to help meet both profitability and environmental objectives.