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28 March 2023

Measuring physical and financial flock performance

Measuring physical and financial flock performance


The Teagasc eProfit Monitor is a unique tool that allows farmers and their advisers to analyse both physical and financial data on the farm enterprises, Damian Costello, Teagasc Sheep Specialist, tells us about the tool.

Sheep farmers need no reminding of how challenging 2022 has been financially. Despite an average lamb price that was slightly ahead of the record 2021 lamb prices, the crippling production costs has led to a drop in profitability of the sheep enterprise. The Teagasc Review and Outlook document 2023 predicts an average decrease in gross margin of 14% in 2022 from the previous year with a forecast for sheep gross margins in 2023 to remain largely similar to 2022 levels. The analysis of the 2021 National Farm Survey data showed that the most profitable sheep farms were achieving a gross margin of €1585 per ha whereas the average profitability was €919 per ha. This clearly shows that focusing on averages is misleading as there is a wide range of performance at farm level with room for improvement in many cases. The gross margin per ha for any given farm enterprise provides a great indicator of the technical efficiency at which it is operating. Furthermore, it highlights areas where improvement will positively impact your bottom line.

Completing an eProfit Monitor

The Teagasc eProfit Monitor is a unique tool that allows farmers and their advisers to analyse both physical and financial data on the farm enterprises. Early in the following year is the time to complete your profit monitor to facilitate planning to improve for the coming year. It is important to take the time to accurately collate the information on income and expenditure and to allocate them to the relevant enterprise on mixed farms. The final report is only as good as the information that is inputted. In broad terms the information you will need can be broken into three sections:

  • Gross output (total money in) takes account of sales and purchases as well as any change in inventory (eg increase/decrease in stock numbers)
  • Variable costs include feed, fertiliser, veterinary costs etc. and vary depending on stocking rate – when subtracted from gross output, it gives a Gross Margin figure
  • Fixed costs are a function of where your farm is at in the investment cycle – will be higher where investments such as buildings, machinery etc. have taken place and won’t change with level of farm activity

Further information on completing a profit monitor, including access to the relevant input sheets is available on www.teagasc.ie or by contacting your local adviser.

Using the information to review your sheep enterprise

The eProfit Monitor provides a detailed report on each enterprise on the farm. It is useful to benchmark the performance of your sheep enterprise against the National Farm Survey (NFS) data or possibly within a discussion group where members are agreeable to share this information. Studies have shown that the key driver of profitability in a sheep enterprise is output per ewe with the national average based on NFS data sitting for a long number of years around 1.4 lambs reared per ewe to the ram. With good management and implementing a defined breeding strategy, some participants on the Teagasc Sheep BETTER farm programme are  rearing up to 1.7/1.8 lambs per ewe joined (30 to 40 extra lambs above the average being produced per 100 ewes). There is also potential on many farms to increase output by increasing ewe numbers but planning to up the output per ewe should be the starting point.

Analysis of costs of production

The concentrate input is the single biggest variable cost in lowland sheep systems – according to NFS, it was over 40% of direct costs in 2021 with an average spend of €32/ewe (including what was fed to her progeny). Best estimates from NFS data indicate that this has risen to around €38/ewe in 2022. In terms of critical analysis of concentrate usage on a sheep farm, the following are questions worth examining:

  • Is lambing date too early where a lot of concentrates being fed after lambing?
  • Do I have a plan to close up paddocks to provide adequate spring grass supply?
  • Can I produce high quality silage to reduce reliance on concentrates pre-lambing?
  • Could I achieve better performance at grass by improving on grassland management?

Another area to keep an eye on is the sheep veterinary costs – if these are high, a flock health plan should be drawn up focusing on prevention and reducing the reliance on expensive antibiotic treatments.

The eProfit Monitor provides an extremely useful annual review of the farm business. If you are anxious to develop and grow your sheep enterprise, the baseline information provided by the profit monitor will help you make informed decisions on the future direction of your flock.

For more information about the Teagasc Sheep Programme, click here.