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SITUATION AND OUTLOOK FOR CATTLE & SHEEP 2008/2009 J. Breen, K. Hanrahan, & A. Kinsella Rural Economy Research Centre Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Overview of Presentation Review of 2007 (NFS Data) Situation in 2008 Outlook for 2009 Take Home Message Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Situation and Outlook for Cattle 2008/2009 Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Review of 2007 (NFS Data) Gross Output (Market-based) Excludes SFP, REPS, Disadvantaged Area Includes SCWS in 2008 and 2009 Therefore excludes SFP, REPS, Disadvantaged Area Gross Margin & Net Margin Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Variation in Total Production Costs 2007 all Cattle farms 800 € per LU 600 400 200 0 High Cost Moderate Cost Labour Low Cost Average Concentrate Feeds Energy & Fuel Pasture and Forage Other Direct Costs Other Fixed Costs Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Variation in Total Production Costs 2007 all Cattle farms 800 € per LU 600 400 200 0 High Cost Moderate Cost Labour Low Cost Average Concentrate Feeds Energy & Fuel Pasture and Forage Other Direct Costs Other Fixed Costs Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Financial Performance per LU 2007 all Cattle Farms 600 € per LU 400 200 0 -200 Least Profitable Gross Output €/LU Average Profitability Most Profitable Average Gross Margin €/LU Net Margin €/LU Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Estimates for 2008 Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Gross Output 2008 Prices up on 2007 Ban on Brazilian beef imports Reduced Supply R3 Steers up 16% O3 Cull Cows up 21% Introduction of the Suckler Cow Welfare Scheme €80 per cow Approx 884,000 cows registered Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Beef Production Systems Four Production Systems focused on SS = Single Suckling RD = Rearing Dairy Farms WF = Weanlings to Stores/Finished SF = Stores to Finished Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Gross Output 2008 by Production system 700 600 500 400 300 200 100 0 SS RD Gross Output 2007 2007 NFS Average, 2008 Estimated Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Up €95 or 24% on SS € per LU WF SF Gross Output 2008 Costs of Production 2008 2008 Expenditure versus 2007 Feedstuffs up 20% Pasture and forage up 28% Energy up 20% All other Inputs up 6% Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Gross Margin 2007 and 2008 by Production system 250 200 € per LU 150 100 50 0 SS RD 2007 WF 2008 SF 2007 NFS Average, 2008 Estimated Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Outlook 2009 Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Gross Output 2009 Average Prices are expected to be largely unchanged compared to 2008 Suckler Cow Welfare Payment is expected to be lower €49 per cow assumed Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Costs of Production 2009 2009 Expenditure versus 2008 Feedstuffs down 20% Pasture and forage down 11% Energy down 10% All other Inputs up 2% Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Gross Margin 2007, 2008 and 2009 by Production system 300 250 € per LU 200 150 100 50 0 SS RD 2007 2008 WF 2009 SF 2007 NFS Average, 2008 Estimated, 2009 Forecasted Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Net Margin Per Hectare 2007, 2008 & 2009 All Farms 200 100 0 -100 -200 -300 -400 -500 Least Profitable Average Profitability 2007 Most Profitable 2008 2009 Average 2007 NFS Average, 2008 Estimated, 2009 Forecasted Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 € per Ha Returns to Production Margin over Direct Costs and Disposable Fixed Costs Non-Disposable Fixed Costs Disposable Fixed Costs Hired Labour Machinery Operating Expenses Depreciation of Machinery Rent of Land Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Returns to Production per Ha 2007, 2008 & 2009 All Farms 500 400 300 200 100 0 -100 -200 -300 Least Profitable Average Profitability 2007 Most Profitable 2008 2009 Average 2007 NFS Average, 2008 Estimated, 2009 Forecasted Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 € per Ha Situation and Outlook for Sheep 2008/2009 Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Sheep Meat Markets 2007/`08 Decline in Numbers Flock Numbers down from 35,300 to 33,700 Ave Flock Size down from 102 to 97 ewes France down 8% Expected to fall further by 23% in 2008/09 Lamb Slaughtering down 13% in Ireland NZ Lamb Exports down Led to higher EU and Irish lamb prices Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Mid-Season Lamb Financial Performance 2007 Source: Teagasc National Farm Survey Average Top 1/3 €/Ha Output Direct Costs Gross Margin 795 351 444 1078 331 747 Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Mid-Season Lamb Technical Performance 2007 Source: Teagasc National Farm Survey Average Top 1/3 Lambing % Weaning % Ewes/Ha Kgs Lamb Carcass/Ha 146 134 8.7 216 150 141 10.9 284 Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Quarterly Irish Lamb Prices, 2007-2008 450 400 Cent/kg dw 350 300 250 200 1 2 3 4 1 2 3 20 07 /Q 20 07 /Q 20 07 /Q 20 07 /Q 20 08 /Q 20 08 /Q 20 08 /Q Source: Bord Bia Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 20 08 /Q 4 Gross Margin €/ewe System 2006 2007 2008 1 2009 2 Early Lamb 46 55 57 61 Mid-Season lamb 42 51 53 58 Hill-Blackface 4 6 7 7 2007 NFS Average, 2008 Estimated, 2009 Forecasted Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Take Home Message Cattle 2008 Prices up but a high cost year Net margin down on 2007 2009 Prices unchanged, costs expected to decline Net margins up on 2007 & 2008 Overall 2/3’s still have negative net margin 1/3 have negative net margin when we look at margin over direct and disposable fixed costs Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Take Home Message Sheep Irish Sheep Numbers/Flock Numbers in Decline Prices in second quarter were up 18% Gross Margin per ewe in 2008 up 4% on 2007 Gross Margin per ewe in 2009 up 8% on 2008 Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008 Thank You Rural Economy Research Centre Situation and Outlook Conference, 9th December 2008
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