SITUATION AND OUTLOOK - For Irish Agriculture April 2022 - Teagasc
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SITUATION AND OUTLOOK
For Irish Agriculture
April 2022
UPDATED FOLLOWING THE INVASION OF UKRAINE
Emma Dillon, Trevor Donnellan, Kevin Hanrahan, Anne Kinsella, Jason
Loughrey, Michael McKeon, Fiona Thorne, Brian Moran and John Lennon
Agricultural Economics & Farm Surveys Department
Teagasc
Athenry,
Co Galway
Ireland
April 13th 2022
Situation and Outlook April 2022
Contents - Situation and Outlook for Irish Agriculture (APRIL 2022)
Introduction 2 Acknowledgement
Global Economy 3 The provision of the National Farm Survey data is a vital stepping stone in
producing a forecast of margin and income developments on Irish farms.
Macro Economy and Exchange Rates 4
The authors wish to express their thanks to all who contribute to the National
Invasion of Ukraine 5
Farm Survey, particularly the farmers who participate voluntarily and the
Farm Inputs 7 Central Statistics Office who select the sample and provide the population
Feed Market 8 weights.
Fertiliser Market 10 Particular acknowledgement is due to the Teagasc research staff involved in
the collection and validation of the farm data: J. Colgan, A Curley, L. Deane,
Energy Market 11 P. Harnett, P. Healy, G. Kenny, P. Madden, J. McConnon,, K. McNamara, M.
Dairy 12 Nicholson, J. Robinson, D. Schilder, J. Teehan, J. Brennan, T. Doyle, M.
Murphy, S. Hegarty and to M. Clarke for the administration of the survey.
Beef 15
Sheep 18
Tillage 21
Pigs 24
Agricultural Economics and Farm Surveys Department
Teagasc
Athenry
Co Galway
H65 R718
Ireland
Situation and Outlook April 2022
INTRODUCTION
In December of 2021 Teagasc published its annual Situation This exceptional analytic exercise is carried out in respect
and Outlook for 2022. In the short period since then the of the current Situation, representing the first quarter of f Uncertainty
outlook for 2022 has changed considerably due to the 2022, and the Outlook representing the three remaining Uncertainty always features when looking at the
Russian Federation’s invasion of Ukraine and the war that quarters of 2022. The categorisation is performed with future. The current situation in agricultural commodity
has resulted. respect to the farmer’s perspective on the impact of market and input markets is evolving. From an agricultural
price, supply and demand developments on farm perspective what happens next depends to a degree on
The destruction, economic upheaval and displacement of what happens in the war in Ukraine and how
people brought about by the war will have the greatest profitability.
governments and other stakeholders around the world
impact on Ukraine. The war is also having significant Examples of positive developments would include: react to supply and demand conditions in commodity
economic consequences in the wider world. A rise in output prices markets.
Ukraine is a major grains and oilseeds exporter. Similarly A fall in input prices
Russia has a significant presence in grain and oilseed export A decrease in international supply As with every year, the other big unknown is weather
Positive
markets. The prospect of a reduced supply of grains and An increase in international demand conditions for the growing season, both here in Ireland
oilseeds on world markets has led to a sharp increase in Favourable weather conditions and internationally. Weather that is favourable for
international grains and oilseed prices. A weaker domestic exchange rate global production could offset some of the anticipated
Fossil fuel prices have also risen sharply, while fertiliser production shortfall resulting from the invasion of
prices, which were already on the increase, have now Ukraine and a poor year for global production would
Conversely, examples of negative developments exacerbate the shortfall.
reached levels never previously experienced.
would include:
It is too early to say with certainty how the war will affect Consequently, it will be necessary to revisit this
the agriculture sector. Without a doubt, production costs A fall in output prices
A rise in input prices Outlook in the next few months as circumstances
will increase considerably in 2022. However, output prices Negative
An increase in international supply evolve.
will also increase and the net impact on producers’ incomes
remains uncertain. A decrease in international demand
Poor weather conditions
The revision of our outlook begins with a summary of the
A stronger domestic exchange rate
current economic situation. The important role that
Ukraine and Russia play in grain and oilseed export markets
is then considered. This is followed by a review of input Where either the situation or the outlook suggests
market developments and prospects. Finally, there is an no change relative to the corresponding period in Neutral
assessment of the likely performance of the main farm the previous year, this is categorised as neutral.
systems in 2022.
In this publication the situation and outlook is summarised. Finally, where it is too early to make an informed
For each commodity sector, production, consumption, judgement such instances are represented by a ?
output price, input market developments and income are question mark.
assessed and are then given either a positive, neutral or a
negative ranking.
Situation and Outlook April 2022 2
GLOBAL ECONOMY Situation and Outlook April 2022 3
MACRO ECONOMY and EXCHANGE RATES
positive, with modified domestic demand (MDD) forecast Figure 2: Euro/Sterling Exchange Rate 2008-2022
Up until the end of 2021 the emergence of the global
to increase by 5.0% in 2022 and by 4.5% in 2023. The ESRI
economy from the pressures of the COVID-19 pandemic
also notes that the conflict has fuelled higher inflation, 1.00
had been impressive. Economic growth rates were
which is now forecast to average 6.7% in Ireland in 2022
favourable, with a rebound evident following on from the 0.90
£ Sterling per Euro
and 5% in 2023.
difficulties encountered during the height of the
0.80
pandemic. One emerging challenge was that supply chain The unemployment rate in Ireland is forecast by the ESRI to
pressures led to a considerable increase in inflation, but continue to fall to 6.3% in 2022 and 4.8% in 2023 and it 0.70
this was thought to be very much a temporary issue. notes that due to the tightening labour market there is a
0.60
However, the invasion of Ukraine by Russia has triggered risk of upward pressure on wages.
a more pronounced jump in inflation that may be cause 0.50
Overall, Ireland’s economic prospects still remain
for greater concern. Sharp increases in energy prices have Jan-08 Jan-11 Jan-14 Jan-17 Jan-20
favourable in spite of the sharp increase in price inflation.
been accompanied by large commodity price increases.
Figure 1: Euro/Dollar Exchange Rate 2008-2022 Source: European Central Bank
In Europe, Brexit and COVID-19 have retreated as political
concerns and have been replaced by the crisis triggered by Figure 3: Key economic indicators Ireland 2021-2023f
1.60
the Russian invasion of Ukraine. Resources will be diverted 20%
1.50
to support the Ukrainian war effort and to provide support 18%
Dollars per Euro 1.40
to the large number of refugees that have been 16%
accommodated by European Union Member States. 1.30 14%
1.20 12%
In the US and UK interest rates have begun to increase in
10%
an effort to dampen inflation and this has led to some 1.10
8%
strengthening of the US dollar and sterling against the 1.00 6%
euro. The European Central Bank has so far declined that 0.90 4%
course of action. 2%
0.80
Jan-08 Jan-11 Jan-14 Jan-17 Jan-20 0%
There are some growing concerns that the global
GDP MDD Unemploy. Inflation
economy could find itself facing a period of stagflation,
Source: European Central Bank 2021e 2022f 2023f
with diminishing growth prospects at a time of higher
inflation. Some commentators have suggested that a Source: Economic and Social Research Institute
global recession is now a possibility.
Following the Russian invasion of Ukraine and the
negative impact this is likely to have on the global
economy, the ESRI has revised downward the short term
growth outlook for the Irish economy. However, the ESRI
notes that economic growth in Ireland should still remain
Situation and Outlook April 2022 4
Invasion of Ukraine Situation and Outlook April 2022 5
Figure 4: Ukraine and Russia share of world export volume for various crop outputs
War in Ukraine 60%
The economic, political and social consequences of the Russian
50%
invasion of Ukraine will be felt deepest by the people of Ukraine itself.
Many will have their lives changed indefinitely. 40%
The war in Ukraine has also begun to have significant economic
30%
consequences internationally. Both Ukraine and Russia are significant
players in global agriculture. Both countries play an important role in 20%
global grain and oilseed export markets. The war therefore has
important consequences for wheat, maize, barley, sunflower seed 10%
and rapeseed markets. Prices in these markets have risen sharply in
0%
the expectation that supplies of grain and oilseeds on the Wheat Maize Barley Sunflower Sunflower Oil Sunflower Rapeseed
international market will be considerably lower than expected. Seed Meal
The upheaval in these specific grain and oilseed markets will have an Ukraine Russia
effect on the prices of other grains and oilseeds, as customers switch,
where possible, to relatively cheaper alternatives which will then too Source: USDA
increase in price. Overall, feed ingredient prices have increased across
Figure 5: FAO Monthly Food Price Index and Associated Indices January 2010 to March 2022
the board
250
Added to this impact on agricultural production and trade, the war
has led to a sharp increase in energy prices and this has further
200
increased fertiliser prices which were already at extremely high levels.
Both fuel and fertiliser are key inputs in commercial agricultural
production. The end result is sharply higher grain and oilseed prices, 150
with prices for meat and dairy products also on the increase. The
increase in energy, other raw materials and food prices, alongside
100
existing supply chain problems, has led to higher rates of general
inflation in the wider economy.
50
The increase in prices and reduced availability of staple food
ingredients and animal feeds gives rise to concern about food
security, particularly in low income countries which are substantial 0
2010-01 2012-01 2014-01 2016-01 2018-01 2020-01 2022-01
importers of basic agricultural commodities. In countries where
consumers already spend a high share of their income on food, Food Price Index Meat Dairy Cereals Oils Sugar
increases in food prices can have serious consequences for human
health and for the functioning of society and political stability. Source: UN Food and Agriculture Organisation
Situation and Outlook April 2022 6
FARM INPUTS Situation and Outlook April 2022 7
FEED MARKET
Based on DAFM and CSO data, average dairy feed use per ending stocks are expected to be low for 2021/22 and Figure 6: Longer Term Index of Monthly Irish Feed Prices
head is estimated to have been about 1,200 kg per cow in 2022/23 in all exporting countries, except Ukraine and 2006-2022
2021, up 8% on the 2020 level. Beef and sheep feed usage Russia. Due to the war in Ukraine, an estimated 25Mt of 170
per head in 2021 was also up on the 2020 level. exportable grain from Ukraine and Russia has not made it to
Index 2015 = 10 0
150
As of March 2022, official data on feed use in the current the world market. With most Ukrainian ports no longer
130
year are limited. DAFM feed sales data for Q1 are not yet operational and it is assumed that very little grain will be
shipped out of Ukraine until at least autumn of 2023. 110
available. Precise forecasts of (i) the magnitude of the
adjustment in purchased feed use to higher feed prices and Furthermore, Russian exports of grain will also be lower due 90
(ii) the impact of lower fertiliser use on grass production to both western sanctions on the Russia Federation and
70
(and indirectly the demand for purchased feed) are difficult domestic Russian restrictions on food grain exports.
to make. Overall, global cereal and oilseed market developments, as
At the time of writing, it is assumed that feed usage volumes reflected in forward contracts prices, suggest that there will
on dairy farms will increase slightly relative to the 2021 level, be an increase in Irish cereal prices at harvest 2022 relative Source: CSO and authors’ estimates for February/March 2022, based on
market reports
due to limited fertiliser availability. The volume of sheep to 2021. At present (April 2022) a 25% increase in farm gate
feed use in 2022 is assumed to be similar that used in 2021. cereal prices for the 2022 harvest is forecast.
Figure 7: Compound Feed use in Ireland by the main
Beef feed usage in 2022 is assumed to be up slightly for Feed prices increased through H2 of 2021, and have species 2021
cattle finishing farms and unchanged on cattle rearing continued to remain ‘bullish’ in Q1 of 2022. These high and Sheep
farms. increasing prices reflects the reduced stocks to use ratios on Poultry 5%
the international cereal balance sheets. Averaging across 13%
Feed prices thus far in 2022 have been on a strong upward
trajectory. Feed prices have increased substantially since the full year it is likely that farm gate feed prices in 2022 will
February 24th when Russia invaded Ukraine. Exports from be at least 20% higher than in 2021. Pigs
15% Cattle
Ukraine and Russia of wheat and maize in 2022 are expected
67%
to be dramatically lower than in 2021. This reduction in
supplies to world markets is expected to lead to continued
increases in grain and oilseed prices which will be reflected
farm gate feed prices in 2022 that are substantially higher
than in 2021.
Source: DAFM
Despite an estimated increase in world production of soft
wheat and maize in 2021/22, reduced ending stocks are
expected. For wheat and maize, stocks to use ratios for the
year a whole, are estimated to have declined. The latest
issue of Strategie Grains (March 2022) concludes that grain
Situation and Outlook April 2022 8Figure 8:US Hard Wheat Price 2008-2022 Figure 9: US Maize Price 2008-2022
400
500 Maize US$ Maize €
US Hard Wheat US$ US Hard Wheat € 350
400 300
price per tonne
price per tonne
250
300
200
200 150
100
100
50
0 0
2008M01 2011M01 2014M01 2017M01 2020M01 2008M01 2011M01 2014M01 2017M01 2020M01
Source: World Bank Source: World Bank
Note: US No1 Hard Red Winter Wheat Gulf Export Price Note: No 2 Yellow f.o.b. US Gulf Ports
Figure 10: International Soybean Price 2008-2022
800
Soybeans US$ Soybeans €
700
600
price per tonne
500
400
300
200
100
0
2008M01 2011M01 2014M01 2017M01 2020M01
Source: World Bank
Note: US Gulf Yellow Soybean #2 c.i.f. Rotterdam
Situation and Outlook April 2022 9FERTILISER MARKET
Fertiliser prices are influenced by the supply and demand price increases expected over the coming months. As a Figure 12: Index of Monthly Irish Fertiliser Prices 2018-2022
balance in the market, but also reflect production costs, Consequence, timing of fertiliser purchases at the farm
350
which are heavily related to energy prices. Energy prices level will have a significant impact on total fertiliser
300
were significantly higher in 2021. Increases in energy expenditure this year. Those farmers who purchased
Index 2015 = 1000
prices were largely a result of the recovery in demand during the first quarter of the fertiliser year (Oct. 2021 – 250
following the COVID-19. Dec. 2021) are likely to have much lower costs than 200
farmers purchasing over the remainder of the fertiliser
Upward movement in energy prices through 2021 and into 150
year.
Q1 2022 had been reflected in fertiliser prices. However, 100
rate of inflation in both energy and fertiliser prices shifted The actual impact of higher prices on volumes applied is
50
dramatically following the Russian invasion of Ukraine in hard to call this early in the season. The latest data from Jan-20 Jul-20 Jan-21 Jul-21 Jan-22
late February 2022. What to that point was principally a the Teagasc fertiliser use survey in March 2022 indicates Source: Central Statistics Office and authors’ estimates for Feb and March
demand driven price dynamic was suddenly augmented by that only one third of farmers have secured their full 2022, based on market reports
disruption to the supplies to Europe of fertilisers and fertiliser requirement for the year thus far. As a Figure 13: Irish Fertiliser Sales in fertiliser year 2015-
natural gas used to produce fertilisers from Russia. consequence of the dramatically higher fertiliser prices, 2021
and our forecast that these high prices will persist for the 500
Prices for fertilisers have risen very dramatically during the Nitrogen Phosphorus
remainder of 2022 it is assumed that fertiliser volumes 450
first three months of 2022. Russia is a significant supplier
applied will be back on those levels applied in 2021. With 400
of fertilisers to Ireland and wider EU27 markets. Sanctions 350
000 Tonnes
the reductions in rates of application ranging from 10% to 300
on trade with the Russian Federation and general market
20% depending on the enterprise concerned. 250
disruption due to the war has been reflected in concerns
200
with the availability of fertiliser supplies on the Irish Figure 11: International Urea Price 2008-2022 150
market. 1000 100
50
The available official data on fertiliser sales covers the first Urea US$ Urea € 0
800
three months of the fertiliser year (Oct 2021 – Dec 2021). 2015 2016 2017 2018 2019 2020 2021
price per tonne
For this three month period a decrease in nitrogen, Source: DAFM
600
phosphorus and potassium sales relative to sales in the
same period in the previous fertiliser year 2020/2021. 400
It is not yet clear whether this reduction will necessarily be
200
reflected in a decrease in usage over the full course of
2021/2022 fertiliser year. Some farmers may have delayed
0
fertiliser purchases in the expectation that fertiliser price 2008M01 2012M01 2016M01 2020M01
inflation would ease over the course of 2022. However, Source: World Bank
due to the war in Ukraine the opposite case is now much Note: Ukraine Black Sea f.o.b.
more likely, with large increases evident across all fertiliser
products during the first three months of 2022, with more
Situation and Outlook April 2022 10ENERGY MARKETS
Under normal circumstances fuel and electricity are not very Figure 14: Brent Oil Prices 2008 -2022 Figure 16: Index of Irish fuel and electricity prices 2015-2022
significant input items in agricultural production. These cost 140 140
items are typically more significant in tillage, pig and poultry US Dollar Euro Electricity Motor fuel
120
Currency per barrel
130
production than they are in grassland systems. However, the 100
Index 2015 = 100
magnitude of the increase in energy prices that is currently 120
80
being experienced, especially since it is occurring alongside 110
60
substantial increase in other input costs, is a concern for all
40 100
farm systems.
20 90
The first signs of upheaval in energy markets emerged in the
0
summer of 2021, which is normally a period when Europe Jan-08 Jan-11 Jan-14 Jan-17 Jan-20 80
builds up its gas reserves ahead of the winter period. Lower Jan-15 Jan-17 Jan-19 Jan-21
Source: Adapted from the St Louis Fed
than normal imports of natural gas into Europe, particularly Source: CSO (and author estimates)
from Russia, resulted in a failure to build up to normal levels Figure 15: European and US Natural Gas Prices 2008-2022
of gas stocks in Europe and the price of natural gas in Europe 45
Europe US
then escalated dramatically over H2 of 2021. 40
35
The Russian invasion of Ukraine and Europe’s attempt to
$ per MMBTU
30
reduce its dependence on Russian energy imports have led to
25
sharp increases in crude oil and other fossil energy prices. As
20
a knock on consequence, the price of electricity has also
15
increased sharply. 10
Having been as low as US$40 per barrel entering 2021, the 5
monthly average Brent crude oil price rose to US$65 by 0
December 2021. Brent crude oil prices have risen further in Jan-08 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 Jan-20 Jan-22
Q1 2022, surpassing the US$100 mark. European natural gas
prices have remained at unprecedented levels in Q1 of 2022. Source: World Bank
Note: Natural Gas (Europe) Netherlands. Natural Gas (US) Henry Hub
The ratcheting up of prices in energy markets, has affected
motor fuel and electricity prices, with motor fuel prices in
particular showing a sharp increase over the last 18 months.
The increase in natural gas prices has driven the sharp
increase in fertiliser prices, given that natural gas is the key
ingredient in nitrogen production.
Situation and Outlook April 2022 11DAIRY Situation and Outlook April 2022 12
DAIRY
Global Supply Global Demand Milk Prices Irish Production Input Cost Irish Farm Income
Situation Outlook Situation Outlook Situation Outlook Situation Outlook Situation Outlook Situation Outlook
Positive Positive Positive Neutral Positive Positive Neutral Neutral Negative Negative Neutral Neutral
Production growth in the International dairy product European dairy prices Input price inflation and Fertiliser prices rose As always, average net
main exporting countries demand in H2 2021 and into increased substantially access to farm inputs will sharply in H2 2021 due to margin in 2022 will be
slowed in H2 of 2021. H1 of 2022 has remained through 2021. dominate production higher gas prices. weather dependent to
Production in 2021 was solid, in spite of high Butter and SMP prices decisions through 2022. Feed prices rose right some degree
up in the US, but was product price levels. reached almost €5,000 and Dairy cow numbers will through 2021, with feed On many farms higher
relatively static in the China remains an important €3,000 per tonne, in Q4 continue to increase, but prices in Q1 2022 feed, fertiliser and fuel
EU27, UK and NZ. part of the global demand 2021, up 23% and 18% high input prices and reaching record levels. expenditure in 2022
Adverse weather in NZ picture. respectively for the year as a uncertainty relating to the The Russian invasion of relative to 2021, should
and S. America is limiting High oil prices may been whole. Cheddar prices rose availability of farm inputs Ukraine has led to further be largely offset by
production growth beneficial for international about 5% in 2021. could depress milk yields. upward feed and fertiliser higher milk prices.
prospects. This alone demand for milk powders. Dairy prices have No increase in milk price movements in Q1 The average Irish dairy
would be lead to lower However, inflationary strengthened even further in production is envisaged in 2022. farm could see a net
global milk production pressures are being felt all Q1 2022, with prices 2022, but favourable or Fertiliser and feed margin per ha and
growth in 2022. along the food chain and expected to remain at adverse weather would availability for 2022 have income level in 2022
The war in Ukraine has will contribute to higher unprecedentedly high levels affect that outcome. become uncertain. broadly in line with the
through 2022. In spite of the dramatic 2021 figure.
created further new dairy commodity prices. The war in Ukraine has
uncertainties in relation However, higher dairy With global dairy export increase in input also led to a further However, fixed milk
to input costs, output commodity prices may have capacity now limited, Irish expenditure, very high milk dramatic increase in price contracts, paying
prices and the associated a limited impact on dairy farm milk prices are now prices may be sufficient to energy prices. well below the spot milk
impact on milk among the highest in the EU. avoid a negative impact on price, will adversely
demand, as price levels for Total milk production
production. some vegetable oil dairy While both supply and dairy margins and income affect incomes on some
costs per litre in 2022
In spite of high milk alternatives have also seen demand side market on most farms. farms.
could be up 30% on the
prices, higher input costs an increase. developments over the Intensive users of 2021 level, but the Overall, the impact of
are set to put a brake on coming months are purchased inputs and degree of uncertainly that the input and output
global milk production uncertain, Irish farm milk farmers dependent on exists makes it difficult to price changes on
growth as 2022 prices in 2022 could be 20% hired labour will likely see predict with high incomes will be specific
progresses. to 30% higher than in 2021. the greatest impact on confidence. to farm circumstances..
However, some producers productions costs.
Farms that have a lower
have significant shares of reliance on purchased
their output in fixed milk inputs are likely to fare
prices contracts, well below better than others.
prevailing spot milk prices.
Situation and Outlook April 2022 13DAIRY
Figure 17: % Change in Milk Production 2021 vs 2020 Figure 18: Monthly Irish Milk Prices 2008 -2022 Figure 19: GDT Auction Index Fortnightly Price
9
Movements in 2021 and 2022
55 20
C per litre (actual fat & protein)
IE 2021 2022
6 50
15
IT 45
% change
3
40 10
% change
US PL
NZ
0 35
5
EU UK 30
AUS
-3 FR DE 0
NL 25
-6 20 -5
Source: Eurostat, AHDB, USDA, Dairy Australia, DCANZ
Jan-08 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 Jan-20 Jan-22 05-Jan 06-Apr 06-Jul Oct-05 Jan-04 Apr-05
Source: CSO Source: GDT
Figure 20: Chinese Powder Imports 2020-2021 Figure 21: EU27 Wholesale Dairy Product Prices Jan 2018 Figure 22: Average Dairy Net Margin per hectare
to Feb 2022 2015 to 2021 and Forecast for 2022
1000
900 SMP WMP Whey Powder
7,000 2,000
800 Butter SMP Cheddar
6,000 1,800
700 1,600
euro per hectare
5,000
'000 tonnes
euro per tonne
600 1,400
500 4,000 1,200
400 1,000
3,000 800
300
2,000 600
200
400
100 1,000 200
0 - 0
2020 2021 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 2015 2016 2017 2018 2019 2020 2021 2022f
Source: IHS Markit Source: Teagasc NFS 2016-2020, Author Estimate for 2021 and
Source: DG Agri
Author Forecast for 2022
Situation and Outlook April 2022 14BEEF Situation and Outlook April 2022 15
BEEF
EU+UK Supply EU+UK Demand Beef Prices Irish Production Input Costs Farm Income
Situation Outlook Situation Outlook Situation Outlook Situation Outlook Situation Outlook Situation Outlook
Positive Positive Positive Positive Positive Positive Positive Positive Negative Negative Negative Negative
EU beef supply is Total EU domestic use Irish finished prime Irish prime beef Direct costs of beef The impact of input
expected to be 0.5% of beef is forecast to cattle prices increased production in Q1 2022 production are expenditure growth is
lower in 2022, be similar in 2022 by 12% in 2021 relative was approximately 5% dominated by forecast to exceed
mainly due to a relative to 2021. to 2020. higher than in Q1 purchased feed and that of output value
reduction in the size 2021. pasture costs. growth in 2022.
Retail and foodservice For 2022, Irish finished
of the cow herd.
demand remains cattle prices are For 2022 as a whole, The war in Ukraine Average gross margin
Strong milk prices strong in the forecast to increase by Irish prime beef has led to large on the single suckling
will incentivize EU European Union and 16% relative to 2021. production is forecast increases in fertiliser enterprise is forecast
dairy farmers to the United Kingdom. to increase by 3% prices and in costs of to decrease by
In 2022, weanling prices
limit cow disposals. compared to 2021. purchased feed and approximately 13%.
Retail demand for are forecast to increase
forage production
EU exports to high Irish beef has by 8% relative to 2021. The number of prime Average gross margin
relative to 2021.
value markets are increased in the finished cattle is on cattle finishing
Store cattle prices in
expected to United Kingdom. forecast to increase Feed prices, motor farms in 2022 is
2022 are forecast to
increase due to by 4% relative to fuel prices and forecast to be similar
Continued absence of increase by 12% relative
recent trade 2021. particularly fertiliser to 2021 due to the
UK customs checks on to 2021.
agreements. prices are forecast to farms in the top-third
agri-food imports A small decline in
For individual farm be substantially of profitability.
Global tightness in from Ireland will slaughter weight is
businesses, timing of higher than in 2021.
beef availability will support continued forecast to partially Overhead costs are
cattle marketing will be
support exports Irish beef exports to offset higher factory Total costs of forecast to increase
particularly important
from Europe. UK. throughput in 2022. production on single by 11%.
in 2022.
suckling and cattle
EU imports of beef FFI on Cattle Rearing
finishing enterprises
are expected to farms is forecast to
are forecast to
increase slightly in decrease by 25%.
increase by 24% and
2022.
30% respectively in FFI on Cattle Other
2022. farms is forecast to
decrease by
approximately 16%.
Situation and Outlook April 2022 16BEEF
Figure 23: Irish and EU27 cow inventories (December) 2007-2021 Figure 24: Monthly EU, UK and Irish Finished Cattle Prices 2014 to 2022 (Excl. VAT)
2,500 33,500 550
33,000 500
2,400
32,500
Euro/100 kg cwe
450
2,300 32,000
000 head
400
000 head
31,500
2,200
31,000 350
2,100 30,500 300
EU UK IRL
30,000 250
2,000
IRL (left axis) EU27 29,500
200
1,900 29,000 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22
2007 2009 2011 2013 2015 2017 2019 2021
Source: Eurostat Source: DG Agriculture and Rural Development, AHDB and ECB
Figure 25: Single Suckling and Cattle Finishing Gross Margin per hectare 2016-2020, Figure 26: Cattle Finishing Gross Output, Direct Costs and Gross Margin per hectare
Estimate for 2021 and Forecast for 2022
1,600
700
2016 2017 2018 2019 2020 2021e 2022f Direct Costs Gross Output Gross Margin
1,400
600
1,200
Euro per hectare
500
euro per ha
1,000
400
800
300 600
200 400
100 200
0 0
Single Suckling Cattle Finishing 2016 2017 2018 2019 2020 2021e 2022f
Source: Teagasc NFS 2016-2020, Author Estimate for 2021 and Author Forecast for 2022 Source: Teagasc NFS 2016-2020, Author Estimate for 2021 and Author Forecast for 2022
Situation and Outlook April 2022 17SHEEP Situation and Outlook April 2022 18
SHEEP
EU+UK Supply EU+UK Demand Lamb Prices Irish Production Input Costs Farm Income
Situation Outlook Situation Outlook Situation Outlook Situation Outlook Situation Outlook Situation Outlook
Postive Positive Neutral Neutral Positive Positive Positive Positive Negative Negative Negative Negative
Outlook is for stable for EU demand for sheep Heavy lamb prices in the For the period January Direct costs of In 2022 margins earned
indigenous EU supply. meat is stable, with EU for the year to date to March 2022, total production on Irish sheep from sheep production
World demand, driven lower supplies reflected are 5% higher compared sheep slaughter is over farms are dominated by are forecast to decline
mostly by China, is in higher prices. to same period in 2021. 9% higher when concentrate, pasture and from the record levels
absorbing more of NZ Declining EU imports, Higher prices in the EU compared with the forage costs. estimated for 2021.
and Australia output. which have not been for heavy lamb are now corresponding period in For the year to date, Higher lamb & sheep
Reduced UK production offset by greater EU forecast for the 2021. fertiliser, feed and fuel prices will be
and exports have production has been remainder of 2022. Total sheep throughput prices have been much insufficient to cover
reduced supplies to the reflected in increasing Average Irish prices for in Ireland, for the year higher than in 2021. increased costs of
EU market. EU lamb prices. the year to date are January to March 2022 Costs of production on production in 2022.
There was a modest Post-Brexit, UK exports almost 8% higher than in is just over 554 Irish sheep farms are Average gross margin
increase in EU sheep to the EU are subject to 2021, remaining well thousand head. forecast to increase per hectare in 2022 is
meat production in normal third country above the 5 year average Based on CSO slaughter substantially in 2022 due forecast to decline by
2021, influenced by customs processes and price (2017-2021). data for the year to to the escalation in over 5% to €700/ha.
positive sheep prices. resulting trade costs will With the seasonal date average slaughter fertiliser and purchased Net margin from mid-
While EU flock size has continue to affect the forecast increase in lamb weights are also higher feed costs in particular. season lamb production
stayed relatively stable competitiveness of UK prices in run up to the Eid than in 2021. The large increase in fuel, is forecast to drop to
in the last five years, sheep meat exports to and Easter festivals, lamb With higher prices and fertiliser and feed prices €110 per ha.
there has been some the EU. prices for 2022 are increased output coupled with some The average Family
shifts in production The continuing absence forecast to average 10% volume, sheep output modest increase in feed Farm Income on sheep
shares between of UK customs checks on higher than in 2021. value is forecast use, is expected to lead farms is forecast to
member states. agri-food imports from increase strongly in to a 30% increase in total decline by 20% in 2022.
In 2022 EU production Ireland will support UK . 2022. costs of production for
is projected to grow demand for Irish sheep 2022.
modestly. meat.
Situation and Outlook April 2022 19SHEEP
Figure 27: Weekly Irish Lamb Prices 2021, 2020, 2019 and average 2017-2022 Figure 28: Lamb Price evolution – EU and Ireland – heavy lamb 2018-2022
900 800
EU Ireland
2021 2017-2021 2022 750
800 700
650
Euro per 100 kg
700
euro/100 kg cwe
600
550
600
500
500 450
400
400 350
300
300 1/1/18 1/6/18 1/11/18 1/4/19 1/9/19 1/2/20 1/7/20 1/12/20 1/5/21 1/10/21 1/3/22
1 5 9 13 17 21 25 29 33 37 41 45 49
Source: DG Agriculture and Rural Development Source: DG Agriculture and Rural Development
Figure 29: EU27 Sheep & Goat meat imports (Jan-Dec) Figure 30: Mid-Season Lowland Lamb Gross Margin per hectare 2019-2022
200 800
UK New Zealand Australia Others
180
700
160
600
140
'000 tonnes cwe
euro per hectare
120 500
100 400
80
300
60
40 200
20 100
0
2020 2021 0
2019 2020 2021e 2022f
Source: DG Agriculture and Rural Development Source: Teagasc NFS 2016-2020, Author Estimate for 2021 and Author Forecast for 2022
.
Situation and Outlook April 2022 20TILLAGE Situation and Outlook April 2022 21
TILLAGE
Wheat Market Other grains market Prices Irish Production Input Costs Farm Income
MarketWheatr market Market
Situation Outlook Situation Outlook Situation Outlook Situation Outlook Situation Outlook Situation Outlook
Positive
? Positive
? Positive
? Negative
? Negative Negative Negative Negative
World soft wheat The war in Ukraine has Wheat and barley: signals It is assumed that the In 2022, there has been a With higher output
production in 2022/23 is severely disrupted at present indicate very winter cereal area very significant increase prices for wheat and
expected to be 715.1 Mt, international grain large increases in harvest planted in in total direct costs. barley, coupled with
up 8.1 Mt on 2021/22. markets. price in 2022 relative to Autumn/Winter 2021 for Whilst some of the less significant
World demand for With spill over effects of 2021. harvest in 2022, is increases in production decreases in yields for
human, industrial and the war impacting the Farm gate cereal prices on broadly in line with the costs were already the main cereal crops,
feed use is expected to 2022/23 season, it is offer from forward area planted in the forecast back in the Irish cereal output
increase by 10.1 Mt year projected that 30 Mt of contracts are at least 25% previous season. December ‘Outlook value is forecast to be
on year. grains could be wiped off higher than prices paid at Whilst there is significant 2022’ document, the war up in 2022.
World ending stocks are the international balance harvest 2021. interest in the recently in Ukraine has The Straw
expected to be down by sheet in 2022/23. Latest commentary from announced €10 million exacerbated the Incorporation Scheme
1.5 Mt in 2022/23 With regards to barley, Strategie Grains (March Tillage Incentive Scheme, inflationary pressure. and the Tillage
compared to 2021/22. the war in Ukraine has 2022) indicates that the it is too early to Inflation in fertiliser and Incentive Scheme will
Stocks are expected to placed a focus on the international stock accurately forecast the fuel, and (feed on boost output value in
remain extremely low in international balance situation projected for area devoted to Spring specialised tillage farms certain circumstances.
the main export regions. sheet for 2022/23, with 2022/23 will keep prices cereal crops for the 2022 with a subsidiary Overall costs in 2022
A critical situation is on ending stocks projected high but should not season. livestock enterprise), will are forecast to increase.
the horizon for 2022/23 to remain historically low prevent a downward Based on trend yields, it be the main items of The significant increase
due to low ending stocks for the coming season. correction at some point in is assumed that yields on concern. in costs is expected to
on the international With regards to maize, the coming months. a per hectare basis will The upward movement be enough to negate
balance sheet. the Ukraine crisis will This market correction is be down on those in energy prices will the increase in output
result in a large reduction expected because prices achieved in 2021. impact some overhead value.
in stocks on the following the sudden shock cost items. Average income on
international balance caused by the war in Overall, it is estimated tillage farms in 2022 is
sheet unless demand Ukraine have risen much that total costs on the expected to be in the
falls much more sharply more sharply than when average tillage farm in mid €30,000’s.
than currently expected. comparable inventory 2022 will be up over 30% However, much
levels were experienced in compared to 2021. uncertainty still
the past. surrounds the potential
of all crops at this stage
of the production year.
Situation and Outlook April 2022 22TILLAGE
Figure 31: World Soft Wheat Balance Sheet (Mt) Figure 32:– Monthly average imported feed barley price (Dublin port) 2014 –22
Decrease in stock/use ratio from 31.4% to 30.7% 400
800 2021/22 2022/23 350
300
600
€ per tonne
250
200
Mt
400
150
100
200
50
0 0
Carry -in Production Trade Demand Carry out 1/9/14 1/9/15 1/9/16 1/9/17 1/9/18 1/9/19 1/9/20 1/9/21
Source: Strategie Grains Source: European Commission, cereals statistics
Figure 33: World Maize Balance Sheet (Mt) Figure 34: Average Irish Tillage Farm Income (2010-2022f)
50,000
Decrease in stock/use ratio from 23.3% to 22.5%
45,000
1400
Maize 2021/22 Maize 2022/23 40,000
1200 35,000
€ per farm
1000 30,000
800 25,000
Mt
20,000
600
15,000
400
10,000
200 5,000
0 0
Carry -in Production Trade Demand Carry out 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021e 2022f
Source: Strategie Grains Source: Teagasc NFS 2016-2020, Author Estimate for 2021 and Author Forecast for 2022
Situation and Outlook April 2022 23PIGS Situation and Outlook April 2022 24
PIGS
EU Supply EU Demand Prices Irish Production Input Costs Farm Income
MarketWheatr
Situation Outlook Situation Outlook Situation Outlook Situation Outlook Situation Outlook Situation Outlook
Positive Positive Positive Positive Negative Positive Negative Negative Negative Negative Negative Negative
EU pigmeat supply is USDA, in their January The Irish pig price has The Irish sow herd has Feed is the largest input The sector was
declining due to the report, forecast EU remained at a low level remained very stable in pig production, moderately loss making
negative margins over pigmeat demand to be during Q1 2022. The over the last 20 years, currently representing in Q3 and Q4 2021 due
the last 18 months. virtually unchanged. margin over feed is at an ranging from 145,000 to 76% of the total cost of to falling pig price and
Germany, Poland, However, in the historic low, with the pig 150,000 sows. production. rising feed prices.
Netherlands, France interim, EU demand for price barely covering the Since the start of March The composite pig feed Losses escalated during
and Belgium are all pigmeat is estimated to feed price. 2022, the national herd price rose sharply Q1 2022 due to the rise
seeing significant have increased. However, the Irish pig has reduced by over through 2021 due to in input prices and
declines in their This is due primarily to price is beginning to rise 10,000 sows, with pig relatively tight stocks. continuing low pig
national sow herd the high price of and this upward trend is units closing. These tight global prices.
populations. substitute meats e.g. expected to continue Another 10-12,000 stocks were severely Margin over feed is now
It is estimated that the beef, lamb. from Q2 2022 onwards. sows are at high risk of restricted when the the lowest in over 30
aggregate decline to It may also be A pig price of €2.20 will being culled in the Russian invasion of years.
date in these countries influenced by the large be required for the sector coming weeks. Ukraine began. The estimated loss on
is 7% or 384,000 sows. number of Ukrainian to breakeven. The very high level of Composite feed prices an average (600 sow)
This sow reduction will refugees entering into Therefore, the Irish pig debt that these farms rose €50/tonne in farm in Q1 2022 was
equate to approx. 9.9 the EU, driving higher price needs to rise by have accumulated, due January 2022 and are €163,000.
million less pigs demand for pork and 36% (€1.62-€2.20) for this to recent historic losses, expected to rise a The forecast loss in Q2
produced per annum. chicken. target to be achieved. will remove the further €70-80/tonne on the average farm
The decline in the UK Chinese import demand The pig price in other EU possibility of restocking. during April-May 2022. will be €145,000.
has been estimated by is still dampened, due countries rose strongly The potential loss of These expected rises The forecast annual loss
ADHB at 10%, which to their high slaughter during March (+34%). pigmeat exports generate a forecast 32% on the average pig farm
would equate to a volumes. The outlook is EU prices are expected to (primary & secondary) increase in feed cost is estimated to be
decline of 40,000 sows. for an increase in continue to rise is forecast at €65 since the start of the €436,000.
The average sale weight Chinese demand for EU throughout Q2 2022. million but could year. It is forecast that the
of slaughter pigs is pigmeat from Q3 2022. US pig prices have gained double if a further 10- Energy costs have sector will return to
falling in Spain & strongly since February, 12,000 sows are culled. increased substantially profitability in March
Germany (0.3-0.5kg), due to a reduction in the over the last 6 months, 2023 due to rising pig
reflecting the demand sow herd and on-going primarily due to prices and a
for finisher pigs. pig disease issues. electricity and fuel price stabilisation in feed
increases. prices.
Situation and Outlook April 2022 25PIGS
Figure 35: Composite Pig Feed Costs c/kg Figure 36: Monthly Irish Pig Price c/kg 2021 and forecast for 2022
160 155 215
150 205 2021 2022
140 195
130 185
118 175
120
110 109
110 107 165
100 155
145
90
135
80
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2018 2019 2020 2021 April 2022*
Source: Teagasc Pig Dept
Source: Teagasc Pig Dept
Figure 37: Estimated annual profit/loss for 600 sow unit (2012-2022) Figure 38: Forecast monthly cost of production & pig price c/kg for 2022
2.40
€300,000 €236,544 Cost Of Production Pig Price
€200,000 €170,554 2.20
€133,056
€100,000 €54,499
2.00
€0
1.80
-€100,000 -€26,544 -€55,776
-€13,541
-€200,000 -€125,496 -€133,056 1.60
-€300,000 -€251,328 1.40
-€400,000
1.20
-€500,000 -€436,623
-€600,000
1.00
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Jan Feb Mar April May June July Aug Sept Oct Nov Dec
Source: Teagasc Pig Dept Source: Teagasc Pig Dept
Situation and Outlook April 2022 26Trevor Donnellan
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