SITUATION AND OUTLOOK FOR CATTLE & SHEEP 2008/2009

1. SITUATION AND OUTLOOK FOR CATTLE & SHEEP 2008/2009 J. Breen, K. Hanrahan, & A. Kinsella Rural Economy Research Centre

2. Overview of Presentation • Review of 2007 (NFS Data) • Situation in 2008 • Outlook for 2009 • Take Home Message

3. Situation and Outlook for Cattle 2008/2009

4. Review of 2007 (NFS Data) • Gross Output (Market-based) • Excludes SFP, REPS, Disadvantaged Area • Includes SCWS in 2008 and 2009 • Gross Margin & Net Margin • Therefore excludes SFP, REPS, Disadvantaged Area

5. Variation in Total Production Costs 2007 all Cattle farms

6. Variation in Total Production Costs 2007 all Cattle farms

7. Financial Performance per LU 2007 all Cattle Farms

8. Estimates for 2008

9. 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

10. Beef Production Systems • Four Production Systems focused on • SS = Single Suckling • RD = Rearing Dairy Farms • WF = Weanlings to Stores/Finished • SF = Stores to Finished

11. Gross Output 2008 by Production system Up €95 or 24% on SS 2007 NFS Average, 2008 Estimated

12. Costs of Production 2008 • 2008 Expenditure versus 2007 • Feedstuffs up 20% • Pasture and forage up 28% • Energy up 20% • All other Inputs up 6%

13. Gross Margin 2007 and 2008 by Production system 2007 NFS Average, 2008 Estimated

14. Outlook 2009

15. 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

16. Costs of Production 2009 • 2009 Expenditure versus 2008 • Feedstuffs down 20% • Pasture and forage down 11% • Energy down 10% • All other Inputs up 2%

17. Gross Margin 2007, 2008 and 2009 by Production system 2007 NFS Average, 2008 Estimated, 2009 Forecasted

18. Net Margin Per Hectare 2007, 2008 & 2009 All Farms 2007 NFS Average, 2008 Estimated, 2009 Forecasted

19. 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

20. Returns to Production per Ha 2007, 2008 & 2009 All Farms 2007 NFS Average, 2008 Estimated, 2009 Forecasted

21. Situation and Outlook for Sheep 2008/2009

22. 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 • Lamb Slaughtering down 13% in Ireland • France down 8% • NZ Lamb Exports down • Expected to fall further by 23% in 2008/09 • Led to higher EU and Irish lamb prices

23. Mid-Season Lamb - Financial Performance 2007 Average Top 1/3 Source: Teagasc National Farm Survey €/Ha 795 1078 Output Direct Costs 351 331 Gross Margin 444 747

24. Mid-Season Lamb - Technical Performance 2007 Average Top 1/3 Source: Teagasc National Farm Survey 146 150 Lambing % Weaning % 134 141 Ewes/Ha 8.7 10.9 Kgs Lamb Carcass/Ha 216 284

25. Quarterly Irish Lamb Prices, 2007-2008 Source: Bord Bia

26. Gross Margin €/ewe System 2006 2007 2008 1 2009 2 46 55 57 61 Early Lamb Mid-Season lamb 42 51 53 58 Hill-Blackface 4 6 7 7 2007 NFS Average, 2008 Estimated, 2009 Forecasted

27. 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

28. 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

29. Thank You