Sheep Farm Management Notes: 15/12/2009
Review of 2009
Michael Gottstein
This is my last article of 2009 and as I sit and write I can’t help but wonder what lies ahead for the sheep industry. It’s really a case of the same old story; numbers are dropping, demand is falling and overall I can help but feel that things on the price front may not change a whole pile over the next 12 months. But then look at the alternatives, dairy, beef, tillage etc. there is certainly no gravy train here either.
At the recent round of Teagasc sheep seminars I had an opportunity to meet a lot of sheep farmers in the southern half of the country. People who attend these seminars tend to be the operators who are committed to sheep and it is interesting to get their take on where things are going.
A topic that comes up at virtually every sheep meeting is price and the huge divergence in the price of a lamb at farm gate compared to what it achieves when it is sold over the supermarket / butcher counter a few weeks later. It is incredible to believe that a farmer will keep a ewe for 12 months, feed and mind her and her lambs and will end up with a mere one third of the final product price. The butcher/meat plant, various middle men and supermarkets get the remaining two thirds having been in ownership of the product for less than one month.
So what can farmers do to improve their lot? Can an individual farmer force the supermarket to hand over more of their profit? Have farmers in all the years ever achieved anything significant on this front? I think the answer is no.
The 2008 profit monitor figures shows that the difference in profitability between the top 1/3 and the average group of mid season sheep farmers is the equivalent of an additional 86cents per kg of lamb carcass produced. This means that for most farmers there is significant scope within the farm gate to make considerable improvements.
Increasing output, litter size while at the same time keeping a tight rein on input costs is key to running a profitable sheep enterprise. The stark reality remains that the bottom third of sheep farmers in the ’08 analysis produce half the number of lambs per adjusted hectare as the top third.
I do not print this fact to justify the miserable / below cost of production prices farmers have been receiving. In fact I think it is fair to say that if sheep farmers are unable to generate incomes that give a fair return on labour and capital employed soon we will see an even bigger exodus from the sheep industry. The fact that REPS is gone and the area based payments are being reduced will only speed up this process.
So where to from here? A new year will hopefully bring better fortunes to our industry. But while we wait for the tide to turn in our favour there are a few key areas that should be looked at. Examine your system and see what areas need improvement. Your target should be to be selling 15 lambs for every adjusted hectare dedicated to sheep. That’s an output of over €1000per hectare. Identify the big costs. These are generally meals, veterinary and contractor and see how these can be pared back.
Selling price will have a big effect on profit. As sheep farmers we need to produce a top quality product that will give customer satisfaction and ensures repeat purchases. We need processors to manage the product in ways that will also enhance the eating qualities. We need to get more farms signed up to the Bord Bia quality assurance scheme so that this can be rolled out at supermarket level. In the current economic climate many consumers will choose an Irish product over an imported product if they are given that information. We are missing the boat here and it is not good enough to just pass the buck and blame factories – sheep farmers too have to take some of the blame – the scheme is free yet we can’t get enough producers to participate!
Over the last year or so a number of farmers and groups of farmers have started marketing their lamb direct with good effect. To date these initiatives have shown that there is a huge willingness to support local producers and that where quality is good consumers don’t mind paying a bit extra.
So while you are enjoying the festive season have a think about the year gone by. Analyse the performance of your flock and rather than spending a lot of time worrying about what you can’t control, plan for those issues that are under you control and where significant progress can be made.
And finally I would like to take this opportunity to wish you and your families a Merry Christmas and a Happy New Year.
