The sheep sector is characterised by low profitability and small holdings and proves to have the lowest average income per hectare at a rate of €311, according to the 2016 Teagasc National Farm Survey.

Although a small proportion of sheep farms had farm borrowings in 2016, the average figure was relatively high at €54,517. The sheep sector’s debt to income ratio stood at 2.08 and proved the highest among all enterprises.

There was a decline of 2% to the average annual lamb price in 2016. This may explain the 1% decrease in average income for 12,758 sheep farmers in 2016. The average income for the sector now stands at €16,011.

On all drystock farms, market income is less than zero which shows that they are not making a profit from production alone without direct payments.

Costs incurred

In terms of farming costs, direct production costs increased by 5% on the average sheep farm on the back of increases in feed and veterinary costs.

In a positive light for 2016, there was a reduction in fertiliser expenditure. Overhead costs also decreased by 9% which resulted in an overall decline in total costs for the average farm of 2% on the 2015 level.

Incomes

As far as incomes go, the survey found that the average gross margin per hectare on sheep farms was €621 in 2016 which included a Basic Payment of €242/ha.

There was a decline in the proportion of farms in the middle income categories.

This has led to an increase in 2016 in farms earning less than €5,000 and €20,000-€50,000 respectively.

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