Positive signs for sheep sector in 2025

Agricultural economists at Teagasc, Anne Kinsella and Kevin Hanrahan examined the prospects for the Irish sheep farming sector in 2025 as part of the Teagasc Outlook 2025, Economic Prospects for Agriculture, noting that higher margins are expected.

Prices

In 2025, Irish lamb prices are forecast to remain close to the high levels observed during 2024, with record high price levels set to continue to prevail. In the EU, high lamb prices also continue to prevail and supplies remain tight. It is forecast that average prices will continue to remain in excess of the five year average year price levels. Continental EU markets account for the majority of Irish lamb and although economic disruptions continue to impact consumer demand, tight global markets for sheep meat and export demand for Irish sheep are forecast to support Irish lamb at, or close to current price levels

Inputs

The outlook for input expenditure in 2025, from the perspective of Irish sheep farmers, is also positive. Prices for the majority of the key inputs to sheep production are forecast to either remain relatively constant or decline slightly. Electricity, fertiliser and concentrate feed prices are just some of the inputs forecast to decrease or remain constant in 2025. Input volumes used in 2025 are forecast to remain relatively unchanged (on a per hectare basis).

Concentrates

Concentrate feed prices are forecast to remain relatively stable in 2025. However, the volume of feed used is forecast to return to more normal use levels owing to less inclement weather conditions, with the volume of feed used forecast to decrease by circa 7%. Additional concentrate feed was required to meet the earlier additional Easter demand in 2024, a year in which Easter was celebrated early in the month of March. For 2025, Easter Sunday falls on 20^th April. Overall expenditure on concentrates in 2025 is forecast to decrease by 7%.

Fertiliser

The price of fertiliser is forecast to decline by circa 5% in 2025, this follows price declines observed in 2024. Fertiliser usage on sheep farms is forecast to return to more normal use levels. Overall, pasture and forage costs on Irish lowland mid-season lamb enterprises are forecast to decline in 2025, by circa 9%.

Forecasts of output, costs and margins

Table 1 summarises our forecasts of output, costs and margins for the mid-season lamb enterprise for 2025. Our outlook for lamb prices in 2025, is that prices will remain at close to the high levels observed in 2024. Our forecast is that sheep carcass output will increase by circa 5% in 2025, recovering some of the loss estimated to have arisen in 2024. With direct costs of production are forecast to decline by 5%, our forecast is that margins in 2025 will increase strongly. Additional payments from participation in the ‘improved’ SIS scheme in 2025 will also support sheep gross margins. Our forecast for the 2025 gross margin per hectare for the mid-season lamb system is €967 per hectare, a 16% increase on our 2024 estimate.

Table 1: Average mid-season lamb enterprise costs, output, gross and net margin, 2023-2025f

Total overhead costs are forecast to increase modestly in 2025. With higher gross margins per ha forecast for 2025, net margin per hectare for the average sheep enterprise are also forecast to increase, rising to €378 per hectare. This equates to a 54% increase on the 2024 net margin of €246 per hectare.

The above was adapted for use on Teagasc Daily from the paper titled: ‘Review of Sheep Farming in 2024 and Outlook for 2025’, authored by Anne Kinsella and Kevin Hanrahan and appearing in the Teagasc Outlook 2025, Economic Prospects for Agriculture

To access the full paper, which includes a review of the economic performance of sheep farms in 2024 and market prospects, click here.