The final report of the 2022 Teagasc National Farm Survey, published this week, shows the massive influence that stocking rate and ewe prolificacy have on potential farm profits. Table 1 details the stocking rate, weaning rate, gross farm output, a selection of costs and gross margin.
As can be readily seen, there is massive variation between the gross margin attained between the top, middle and bottom third of farmers included in the survey. The top third of farmers, in terms of performance, achieved a gross margin almost twice higher than the middle third – while the middle third of farmers, in turn recorded a gross margin three times greater than the bottom third.
The key drivers underpinning higher performance is stocking rate and weaning rate. The top third of farmers had a stocking rate of 9.51 ewes/ha or 3.85 ewes/ac. This is close to the optimum level of 10 ewes/ha to 12 ewes/ha, stemming from research in Teagasc Mellows Campus Athenry, and exceeds the target for the Teagasc sectoral roadmap of greater than nine ewes/ha. This is the optimum level of production, provided the farm can grow 1t grass dry matter/ha for every ewe carried.
The weaning rate has a greater influence than stocking rate, as increasing the number of ewes without lifting prolificacy to a reasonable level delivers added costs in retaining such extra ewes without having extra sales to dilute costs. This is evident when you compare the performance between the top- and middle-producing farmers.
The stocking rate in the middle third of farmers is relatively positive, at 7.33 ewes/ha. If this stocking rate was maintained and prolificacy increased to match performance in the top third of farmers, it would deliver just shy of two more lambs for sale. The low level of financial return in the bottom third of farms is severely hampered by the fact that the enterprise still has significant costs to bear, with the low level of output struggling to cover these and return a margin.
If the average fixed costs incurred in 2022 totaling €730/ha were taken in to account the top third-performing enterprises would have recorded a net margin of €779/ha. This shows that even where costs were unusually high, the highest performing systems still were capable of returning a positive net margin, excluding direct payments. The middle third of farmers would record a net margin of just €91/ha, while the bottom third of farmers would need to supplement their business to the tune of €460/ha to cover costs. Such a fixed cost could be considered high for a lower level of output, but even if fixed costs fell to €500/ha, these farms would still be subject to a significant loss.
The average performance figures detailed in Table 2 have been well documented and show just how exposed sheep enterprises have been to rising input costs. Table 3 documents these costs on a per ewe basis. Preliminary performance data for 2023 will be released over the next week, but it is not expected to be too dissimilar to 2022 performance – given farmgate prices are largely unchanged and input costs have remained high.
2027 sectoral roadmap targets
Table 4 details the number of enterprises already achieving the Teagasc Sectoral Road Map targets for sheep production in 2027. The targets are detailed in the first column. The highest level of adherence is in the lamb mortality target of lower than 8%. Some 71% of farmers satisfied this criteria in 2022.
The figure appears high, with many high-prolificacy systems struggling to achieve a lamb mortality figure of 10%. The percentage of ewe’s lambs is reasonably good, but there is huge scope to increase the weaning rate. Just 24% of farmers represented by the survey weaned greater than 1.55 lambs per ewe mated, with the national average figure remaining in the region of 1.3 lambs for too long.
The level of fertiliser used reduced as a direct impact of cost and this will remain the case for 2023. Total fertiliser use in sheep systems is comparatively low and a significant number of farmers converting to organic farming production will ensure this remains the case.
It is not surprising that the use of protected urea is low, with sheep systems not big users of fertiliser early in the season, while the number of enterprises applying slurry is also low.
Distribution of flock size
Almost 60% of all flocks had less than 100 ewes in 2022. These flocks were responsible for 53% of lambs produced across farms in 2022. The report highlights that a shift to larger flocks in recent years was reversed in 2021 and 2022, with 31% of flocks possessing between 100 and 150 ewes in 2019, falling to 25% in 2021 and 23% in 2022. This category produced 24% of all lambs, while just 19% of flocks had more than 150 ewes and produced 23% of lambs.