SITUATION AND OUTLOOK - For Irish Agriculture July 2021
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SITUATION AND OUTLOOK
For Irish Agriculture
July 2021
Trevor Donnellan, Kevin Hanrahan, Anne Kinsella, Jason Loughrey, John
Lennon, Brian Moran, Fiona Thorne and Emma Dillon
Agricultural Economics & Farm Surveys Department
Teagasc
Athenry,
Co Galway
Ireland
29th July 2021
Situation and Outlook July 2021
Contents - Situation and Outlook for Irish Agriculture (July 2021)
Introduction 2 Acknowledgement
Global Economy 3 The provision of the National Farm Survey 2020 is a vital stepping stone in
producing a forecast of margin and income developments on farms in 2021.
Macro Economy and Exchange Rates 5
The authors wish to thank all who contributed to the National Farm Survey
Weather Conditions 6
2020, including the farmers who participate voluntarily, the Central Statistics
Farm Inputs 8 Office who select the sample and provide the population weights.
Feed Market 9 Particular acknowledgement is due to the Teagasc research staff involved in
Fertiliser Market 10 the collection and validation of the farm data: J. Colgan, A Curley, L. Deane,
L. Delaney, P. Harnett, P. Healy, G. Kenny, P. Madden, J. McConnon,, K.
Energy Market 11 McNamara, M. Nicholson, J. Robinson, J. Teehan and to M. Clarke for the
Dairy 12 administration of the survey.
Beef 15
Sheep 19
Tillage 22
Agricultural Economics and Farm Surveys Department
Teagasc
Athenry
Co Galway
H65 R718
Ireland
Situation and Outlook July 2021
INTRODUCTION
In December of 2020 Teagasc published its annual Situation The categorisation takes account of the position in the neutral symbol should be used. Such instances are
and Outlook for 2021. This was revised in February 2021 to previous period. So for example a fall in milk prices in the represented by a question mark.
reflect the outcome of the Brexit negotiations. In July of first half of the year in comparison with the same period in This approach is designed to highlight the key market
2021 Teagasc has published this mid-year update on its the previous year would be categorised as a negative developments that have recently taken place and that are
outlook for 2021 to reflect ongoing market developments situation. likely to take place in the short term and to highlight, if
The mid-year outlook begins with a summary of current However, if milk prices were anticipated to rise in necessary, key uncertainties regarding the short-run
economic conditions, looking at the international the outlook period relative to the same period in outlook. The associated information is then distilled down
macroeconomic picture and recent exchange rate the previous year this would be described as a to a series of summary tables.
developments. This is followed by a review of weather positive outlook.
conditions and input markets. The update then provides a Examples of positive developments would
summary of the developments that have taken place in include:
commodity markets during the first half (H1) of 2021.
Finally, there is an assessment of the performance of the A rise in output prices
A fall in inputs prices Positive
main farm systems in H1 2021. COVID-19
A decrease in international supply
The report then takes a short-term outlook perspective to
An increase in international demand
the end of 2021, assessing likely future developments and Due to the vaccination programme, the COVID-
Favourable weather conditions
how they would influence commodity prices, production 19 pandemic is having a reduced impact on
A weaker domestic exchange rate
costs and farm profitability.
economic activity in high income economies. The
Across the various farm sectors, access to timely official
data on production volumes, output prices, input utilisation Conversely, examples of negative developments assumption in this Outlook is the influence of
volumes and prices, remains a challenge across the EU. would include: COVID-19 on economic activity continues to
Official data sources tend to lag behind the actual market A fall in output prices recede.
situation by three months and more in some cases. It is A rise in inputs prices
therefore necessary to rely on unofficial data sources, An increase in international supply However, it continues to remain a concern and
industry expertise and even anecdotal evidence to form an Negative
A decrease in international demand creates some uncertainty about the future
up to date assessment of output and input prices,
Poor weather conditions economic outlook.
production and input usage.
A stronger domestic exchange rate
In this publication the situation and outlook is summarised.
BREXIT
For each commodity sector, production, consumption, Where either the situation or the outlook
output price, input market developments and income are suggests no change relative to the corresponding
assessed and are then given either a positive, neutral or a
A trade deal between the EU and UK was agreed
period in the previous year, this is categorised as
negative ranking. neutral. Neutral in December of 2020. This is now in place,
This exercise is carried out in respect of the Situation, although some aspects of the deal have to be
representing the first half of 2021, and the Outlook Finally, in instances where it is either too early to fully operationalised.
representing the second half of 2021. The categorisation is make an informed judgement or where there is a
performed with respect to the farmer’s perspective on the
impact of market price, supply and demand developments
deficit of the necessary data on which a ?
judgement should be made, it may not be possible
on farm profitability. to determine whether a positive, negative or
Situation and Outlook July 2021 2
COMMODITY SECTOR SUMMARY
Dairy Beef Sheep Tillage
Situation Outlook Situation Outlook Situation Outlook Situation Outlook
Positive Positive Positive Positive Positive Positive Positive Positive
PRODUCTION: Global milk supply growth in PRODUCTION: Irish beef production PRODUCTION: Irish sheep slaughter PRODUCTION: In Ireland, favourable
H1 2021 has slowed, but there has still been decreased by 7% in H1 2021 due to lower during period Jan - June 2021 is 9% sowing and growing conditions mean
an overall increase in milk production in the production in the first quarter. Over the lower compared to the corresponding yields in 2021 will exceed 2020. Whilst it
major exporting regions. Irish milk course of the full year, production is period in 2020. However, when is early in the harvest season, first
production for H1 2021 is like to be up 8% forecast to end the year 4% lower. measured on a tonnage basis (cwe), production estimates for 2021 indicate a
compared to the same period last year. sheep slaughterings decreased by 15 percent increase in total cereal
PRICES: Finished cattle prices are forecast
somewhat more, circa 11%. tonnage compared to 2020 is likely.
PRICES: Irish milk prices rose in H1 of 2021. to be 12% higher in 2021. Retail demand
for beef is increasing in the EU. Demand PRICES: The estimates for EU production,
Weaker global milk production growth has PRICES: EU and Irish heavy lamb
from the foodservice sector is increasing demand and ending stocks for 2021 are
been coupled with firm dairy export demand prices are to date over one quarter
strongly in the UK with the re-opening of creating upward movement on cereal
and higher prices. For the year as a whole, higher in 2021 compared to 2020.
the economy. China’s rising demand for prices this harvest compared to 2020,
Irish milk prices in 2021 could be up over This reflects higher prices in the EU
beef is increasing global beef prices. Beef with prices quoted for green barley about
10% compared with 2020. for heavy lamb, which are forecast to
supply in 2021 is lower in both the EU and 15% up on 2020 harvest prices.
COSTS: H1 of 2021 has seen somewhat persist over the remainder of 2021.
the UK and this influences the price for Irish COSTS: Prices for the main input items on
mixed weather. Higher cow numbers have COSTS: Costs of production on Irish
beef in 2021. tillage farms are all increased on the 2020
helped to boost feed use in 2021, while sheep farms are forecast to increase levels. In addition the use of direct costs
fertiliser use is also likely to be higher. Feed COSTS: Costs of production have increased in 2021. Overall, the increases in fuel, of production are likely to be up on 2020
and fertiliser prices in 2021 are both higher in 2021 due to higher feed and fertiliser fertiliser and feed prices are expected also due to the increase in winter cereal
than in 2020. Total production costs for prices and higher prices for overheads to lead to an 8% increase in total costs sowing. Total farm costs on tillage farms
2021 are forecast to rise by 5% relative to including fuel and electricity. These rising of production for 2021. are expected to be up over 10%.
2020. costs will offset some of the positive
MARGINS: The forecast increase in MARGINS: The increase in cereal and
MARGINS: Average dairy net margin per ha impact of higher marketed output value on
costs in 2021, coupled with more straw yields in 2021, coupled with an
in 2021 could be on a par with the high of farm incomes.
favourable lamb and sheep prices, increase in cereal prices will likely lead to
2017. An average dairy farm income in MARGINS: Average gross margin per ha is will impact positively on gross a significant increase in gross output.
excess of €85,000 in 2021 is possible. forecasted to increase on Cattle Rearing margins. For 2021 gross margin per Even accounting for cost inflation, it is
farms and Cattle Finishing farms by 7% and hectare are forecast to grow strongly, estimated that family farm income on
10% respectively. Average Cattle Farm increasing by over 35% to over specialist tillage farms will be in excess of
incomes are forecasted to increase by €800/ha. €40,000 in 2021.
approximately 5% in 2021.
Situation and Outlook July 2021 3
GLOBAL ECONOMY Situation and Outlook July 2021 4
MACRO ECONOMY and EXCHANGE RATES
While a global economic recovery is underway, the short-term Figure 1: Euro/Dollar Exchange Rate 2008 -2021
macroeconomic outlook will continue to be influenced by the need to
contain the COVID-19 pandemic, in particular the spread of vaccine 1.60
resistant COVID-19 variants. Unsurprisingly, economic growth rates 1.50
for 2021 are likely to be larger than normal, reflecting the recovery in
1.40
Dollars per Euro
2021 from the negative growth experienced in many of the world’s
1.30
major economies in 2020.
1.20
While the US dollar weakened in value against the euro in 2020, it has
1.10
since stabilised and the exchange rate has moved over a relatively
1.00
narrow range so far in 2021.
0.90
There has been a bit more fluctuation in the exchange rate between
0.80
the sterling and the euro over the course of the past year, over a range
Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 Jan-20
of about 6 pence. Sterling remained at a comparatively low rate
against the euro, currently close to 90p, towards the end of 2020 as Source: European Central Bank
the BREXIT negotiations went down to the wire. However, when a
trade agreement between the EU and UK was finally reached in Figure 2: Euro/Sterling Exchange Rate 2008 -2021
December of 2020, this removed some of the uncertainty facing the
1.00
UK economy and sterling has strengthened against the euro over the
0.95
first half of 2021.
0.90
£ Sterling per Euro
The recovery of sterling is welcome from the perspective of Irish agri- 0.85
food exporters with business in the UK, since it makes Irish exports 0.80
more competitive on the UK market. However, Irish exporters will be 0.75
experiencing additional Brexit related non-tariff based trade frictions 0.70
in exporting to the UK, and via the UK to continental Europe, which 0.65
will add to their cost base. 0.60
0.55
0.50
Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 Jan-20
Source: European Central Bank
Situation and Outlook July 2021 5
WEATHER CONDITIONS Situation and Outlook July 2021 6
WEATHER CONDITIONS
Weather conditions in 2021 have shown considerable variation
Figure 3: Jan. to June 2021 Mean Temperature Figure 4: Jan. to June 2021 Rainfall Relative to
relative to normal and this has had an impact on both grazing Relative to Normal (1981-2010) Normal (1981-2020)
conditions and grass growth at various points in the first half of 2021.
2.0 300
High levels of rainfall in February were followed by rainfall levels that
Index (Normal = 100)
250
were well below normal in March and April. This contributed to below 1.0
Degree C vs Normal
par grass growth levels in April and May, which were also 200
unseasonably cold, particularly at night. Grass growth recovered in 0.0
150
June, but has dipped again in July due to a dry period with unusually -1.0
high temperatures. 100
-2.0 50
Figure 3 provides a summary of deviations in air temperature to date
this year compared to normal levels, for a range of Teagasc locations. -3.0 0
Similarly, Figure 4 illustrates an index of monthly rainfall amounts Jan Feb Mar Apr May Jun Jan Feb Mar Apr May Jun
relative to normal across a number of Teagasc locations through to Athenry Grange Oak Park
Athenry Grange Oak Park
the end of June 2021.
Moorepark Johnstown Moorepark Johnstown
The variability in weather conditions across the country, relative to
normal has been widespread, with no noteworthy region specific Source: Met Eireann Source: Met Eireann
deviations.
Figure 5: Irish Grass Growth 2019, 2020 and 2021
Note: Normal weather is defined as the 30 year average from 1981 to
90
2010.
80
70
60
kg DM/ha/day
50
40
30
20
2021 2020 2019
10
0
Jan-27 Mar-24 May-19 Jul-14 Sep-08 Nov-03
Source: Teagasc Pasture Base Ireland
Situation and Outlook July 2021 7FARM INPUTS Situation and Outlook July 2021 8
FEED MARKET
Based on DAFM and CSO data, average dairy feed use per head is estimated to have been 2020, and continued high prices in H1 of 2021 reflects the decrease in stocks to use ratios
about 1,120 kg per cow in 2020, down very slightly on the 2019 level. Beef feed usage per on the international balance sheets. Averaging across the full year it is likely that feed
head in 2020 was also down slightly on the 2019 level, while sheep feed use increased in prices in 2021 will be about 9 percent higher than in 2020.
2020.
Figure 6: Index of Monthly Irish Feed Prices 2018-2021
For 2021, early indications are that dairy feed usage volume may increase relative to the 120
2020 level. The volume of sheep feed used also looks like being higher in 2021 relative
to 2020. The outlook for beef feed usage in 2021 is less clear, as further data is required. 115
Index 2015 = 100
Feed prices in 2021 have been on the increase, continuing the upward trend which was 110
observed right through 2020. Higher cereal harvest prices in 2020 and increased
105
demand for feed grain markets in the first half of 2021 are the main drivers of this feed
price increase in 2021. 100
As of July 2021, official data on feed use in the current year are limited, with DAFM feed 95
sales data available for Q1 only. These data show that the aggregate volume of dairy
feed sales in Q1 2020 was up 6% on the same period in 2020, perhaps reflecting the 90
continuing increase in dairy cow numbers, strong milk yield growth and a slower start to Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
the grazing season in 2021. High lamb prices may also have prompted the higher sheep 2018 2019 2020 2021
feed sales that has been observed inQ1 2021 .
Source: Central Statistics Office
Overall, given the growth in the dairy cow herd, early indications are that aggregate dairy
feed use will be higher in 2021, with an increase in feed use per head relative to 2020 Figure 7: Longer Term Index of Monthly Irish Feed Prices 2006-2021
also likely. 130
Aggregate beef feed sales decreased in Q1 of 2021, but were only a little lower than in 120
Index 2015 = 10 0
Q1 2020. For 2021 as a whole, it is possible that beef feed use will be on a par with 2020,
110
but further data is required to be more confident of that outcome. In 2021 sheep feed
use is likely to be higher than in 2020. 100
Taking a more global view, it is still too early in the year to be fully confident, but it would 90
appear that the global wheat and barley harvest are both forecast to increase in 2021 by 80
about 3%. However, demand is also expected to increase by 3 to 4%, with stocks
70
expected to remain low, with a further decrease in the ending stock/use ratio in 2021/22
Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 Jan-20
compared to 2020/21. Overall, this suggests that there will be an increase in cereal prices
Source: Central Statistics Office
on the Irish market at harvest 2021 relative to 2020. At present (July 2021), a 15%
increase in farm gate winter barley prices for the 2021 harvest is expected.
As shown in Figure 6 and Figure 7, feed prices have moved upwards in H2 of 2020, and
have continued to remain ‘bullish’ in H1 of 2021. The increase in prices at the end of
Situation and Outlook July 2021 9FERTILISER MARKET
Energy prices, particularly for oil were significantly lower in 2020. This unanticipated Figure 8: Index of Monthly Irish Fertiliser Prices 2018-2021
energy price decrease was a result of the COVID-19 crisis and the related knock-on
100
impact on economic activity. Fertiliser prices are influenced by supply and demand in
2018 2019 2020 2021
the market, but also reflect production costs, which are heavily related to energy prices.
95
Figure 8 contains official monthly fertiliser price data from the CSO. Downward
movement in prices observed in 2019 and this continued right through 2020.
Index 2015 = 1000
90
However, energy prices have recovered in H1 of 2021 and this has also prompted a
recovery in fertiliser prices in H1 2021, bringing fertiliser prices back up to 2019 price 85
levels.
80
In terms of fertiliser sales in Ireland, the available official data covers the first six months
of the fertiliser year (Oct 2020 – Mar 2021). For this six month period Figure 9 shows a 75
very sharp increase in nitrogen, phosphorus and potassium sales. It is not yet clear
whether this will necessarily mean an increase in usage in the 2021 fertiliser year, as 70
some of these fertiliser purchases will have been made to build up stocks on farm in the Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
knowledge that there would be a large increase in fertiliser prices in 2021.
Source: Central Statistics Office
Fertiliser usage associated with cereal production tends to be more predictable from Figure 9: Irish Fertiliser Sales in first 6 months of fertiliser year 2015-2021
year to year than that experienced on grassland farms. On cereal farms any changes in
fertiliser volume will tend to be associated with a shift in the total crop area sown, i.e. 225,000
shifts in cropping pattern between winter and spring sown crops and nutrient off takes 200,000
Oct '17 to Mar '18 Oct '18 to Mar '19
from the previous year yields. Hence, for the 2021 harvest, it is expected that fertiliser 175,000
volume on cereal farms will be up due to an increase in winter sown crops. Oct '19 to Mar '20 Oct '20 to Mar '21
150,000
Tonnes
125,000
100,000
75,000
50,000
25,000
0
Nitrogen Phosphorus Potassium
Source: DAFM
Situation and Outlook July 2021 10ENERGY MARKETS
Figure 11: European Natural Gas Average Import Price 2008 2021
Fuel and electricity are less significant input items than feed and 20
fertiliser in grassland systems. However, the price of energy has
implications that extend throughout the economy, given the 15
$ per MMBTU
importance of energy as a cost item in the production and distribution
of goods. 10
Crude oil prices dropped dramatically in 2020, reflecting the subdued
5
demand for aviation and ground transportation and the negative
economic growth related to the COVID-19 pandemic. 0
Energy prices began to recover slowly through H2 2020 and into H1 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 Jan-20
2021 the recovery has accelerated.
Source: World Bank
Having been as low as US$20 at one point in Q2 of 2020, the monthly
average Brent crude oil price recovered to just under US$50 in Figure 12: Index of monthly fuel and electricity prices 2015-2021
December 2020, as illustrated in Figure 10. Brent crude oil prices have 120
risen further through H1 2021, reaching a level of US$73 per barrel in Electricity
June 2021. European natural gas prices have also moved sharply Motor fuel
110
Index 2015 = 100
upwards in H1 2021, mirroring the recovery in crude oil prices.
The price recovery in energy markets, has affected motor fuel and
100
electricity prices, with motor fuel prices in particular showing a sharp
increase since the beginning of 2021.
90
Figure 10: Brent Oil Prices in Euro and US Dollar Terms 2008 -2021
140 80
120 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21
Source: CSO
Currency per barrel
100
80
60
40
20
US Dollar Euro
0
Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 Jan-20
Source: Adapted from the St Louis Fed
Situation and Outlook July 2021 11DAIRY Situation and Outlook July 2021 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 Neutral Positive Positive Negative Negative Positive Positive
In the key export International dairy product European wholesale dairy Production conditions in Feed prices in H1 of 2021 Average net margin in
regions, milk demand in H1 2021 has prices have improved in 2021 were affected by have been 10% higher 2021 could hit 14 cent
production growth has remained solid. 2021. heavy early season rain than in H1 2020 and per litre, but will depend
been slower in 2021 China remains an Butter reached €4,100 per and lower than normal further upward price on grass growing
than in 2020. important part of the tonne, in June 2021, a 20% temperatures. This led to movement is likely over conditions and input
Milk production in the global demand picture, increase relative to restricted grass growth in the rest of 2021. requirement in H2.
UK and EU has slowed, with imports remaining December 2020. April and May. Dairy feed sales in Q1 Higher feed, fertiliser
while it has remained strong in 2021 The growth in Irish dairy 2021 have increased and fuel expenditure in
SMP prices have also
stronger in NZ and US. cow numbers continues, relative to 2010. Overall, 2021 relative to 2020
COVID-19, while receding increased reaching €2,600
with an increase of just feed use in 2021 will will partially offset
In 2021, milk as a concern in rich per tonne in June 2021, an
over 3% likely in 2021. depend on late season higher milk prices.
production to the end economies, remains a increase of 18% since
weather conditions. An The current forecast is
of May has increased in concern elsewhere. December 2020. Milk yields to date in
increase of 2% per head is that the average Irish
NZ by almost 6%, in the High shipping costs and By contrast, cheddar prices 2021 are up slightly on
assumed. dairy farm could see a
US by close to 3%. the 2020 level, perhaps
logistical bottlenecks have moved over a fairly Energy and fertiliser net margin per ha in
By contrast, EU milk remain a concern for narrow range. driven by higher feed use.
prices in 2021 have risen 2021 in excess of €1,700
production has international trade. Peak season monthly Irish Milk fat and protein due to higher oil and gas on a par with the high of
increased in the period COVID restrictions are farm milk prices in 2021 levels in 2021 have prices. 2017.
January to May 2021 by easing faster in the US than are about 5 cent (15%) increased marginally. Fertiliser sales are up but Early indications are that
0.4%. UK milk in Europe, where a return higher than the same point With normal weather and this may be a hedge average dairy farm
production has grown to a more normal lifestyles on 2020. no deterioration in milk against further price income could exceed
by over 1% in the same may take until 2022. prices over the rest of increases. €85,000 in 2021, with
Short-term prospects are
period. 2021, Irish milk Total production costs incomes boosted by
more uncertain, following a
Higher feed costs could succession of recent production is likely to be per litre in 2021 could be strong production
put a brake on growth, up at least 6% on the up 5% on the 2020 level. growth.
negative GDT auction
later in the year. outcomes. 2020 level.
Adverse weather in EU
is also a concern.
Situation and Outlook July 2021 13DAIRY
Figure 13: % Change in Milk Production Jan- May 2021 Figure 14: Monthly Irish Farm Milk Prices (actual fat) Figure 15: GDT Auction Index Fortnightly Price
15
Movements in 2020 and 2021
50 20
2020 2021
10 IE 45 15
Cent per litre
NZ 40 10
% change
% change
5 IT 35 5
US
AUS EU UK PL 30 0
0
25 -5
FR NE
DE
-5 20 -10
Source: Eurostat, AHDB, USDA, Dairy Australia, DCANZ
Jan-08 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 Jan-20 07-Jan 07-Apr 21-Jun 06-Oct 05-Jan 06-Apr 06-Jul
Growth rates are adjusted for 2020 leap year Source: CSO Source: GDT
Figure 16: Chinese Powder Imports Jan-May 2014-2021 Figure 17: EU27 Wholesale Dairy Product Prices Oct 2017 Figure 18: Dairy Net Margin per hectare 2014 to
to May 2021 2019 and Forecast for 2021
600
SMP WMP 7,000 1,800
500 Butter SMP Cheddar
6,000 1,600
400 1,400
Euro per hectare
'000 tonnes
5,000
euro per tonne
1,200
300 4,000 1,000
3,000 800
200
600
2,000
100 400
1,000 200
0
- 0
2014 2015 2016 2017 2018 2019 2020 2021
Oct-17 Oct-18 Oct-19 Oct-20 2014 2015 2016 2017 2018 2019 2020 2021f
Source: IHS Markit
Source: Teagasc NFS 2014-2020, 2021 Author forecast.
Source: DG Agri
Situation and Outlook July 2021 14BEEF Situation and Outlook July 2021 15
BEEF
EU+UK Supply EU+UK Demand Beef Prices Irish Production Input Costs Farm Income
Situation Outlook Situation Outlook Situation Outlook Situation Situation Situation Outlook Situation Outlook
Positive Positive Negative Neutral Positive Positive Negative Negative Negative Negative Positive Positive
EU beef production Due to lower Average EU male Irish beef production Direct costs of beef The impact of output
in H1 2021 foodservice demand in finished cattle prices in H1 2021 was production are value growth is
decreased by 1% vs H1 2021, the total EU were 6% higher in H1 approximately 7% dominated by forecasted to exceed
H1 2020. domestic use of beef is 2021 relative to H1 lower than in H1 2020. purchased feed and that of input
EU beef supply is forecast to decrease 2020. This fall was due to pasture costs. expenditure growth
expected to be 1.4% by 1% in 2021. Irish finished prime reduced factory For the year to date, for both single suckling
lower in 2021. cattle prices have throughput in both feed and fertiliser and cattle finishing
Retail demand for beef
The forecast decline increased by 10% in H1 February and March. prices have been enterprises in 2021.
has increased in EU
in EU beef 2021 relative to H1 For 2021 as a whole, significantly higher Gross margins on
member states such as
production is mainly 2020. Irish beef production is than in 2020. single suckling
France and Germany.
due to a reduction in For 2021, Irish finished forecast to decline by For the year as a enterprises are
Foodservice demand is
the size of the cow cattle prices are forecast approximately 4% whole, both feed and forecast to increase by
recovering in key
herd (beef and to increase by about compared to 2020. fertiliser prices are 7%.
export destinations
dairy). 12% relative to 2020. forecast to be 9% Gross margins on
and particularly in the
Exports to high value In H1 2021, weanling higher than in 2020. cattle finishing farms
United Kingdom.
markets are prices are up 5% on H1 Motor fuel prices are are forecast to
expected to increase 2020. Over all of 2021, forecast to be 10% increase by 10%.
due to recent trade weanling prices are higher in 2021 relative Despite higher
agreements with forecast to be 7% higher to 2020. overhead costs, FFI on
Canada and Japan. relative to 2020. Total costs of Cattle Rearing farms is
EU imports of beef Store cattle prices are production on single forecast to increase by
are expected to forecast to increase by suckling and cattle 5%, while FFI on Cattle
recover significantly 10% relative to 2020. finishing enterprises Other farms is forecast
and are forecast to are forecast to to increase by 4%.
be 8% higher in increase by 3% and 6%
2021. respectively in 2021.
Situation and Outlook July 2021 16BEEF
Figure 19: Monthly EU Young Bull and Brazilian Steer Prices 2013-2021 Figure 20: Irish and EU27 cow inventories (December) 2007-2020
500 2,500 33,500
400 2,400 33,000
euro/100 kg cwe
32,500
300 2,300
000 head
000 head
32,000
200 2,200
31,500
100 2,100
31,000
0 2,000 30,500
IRL (left axis) EU27
Jan-13 Jan-15 Jan-17 Jan-19 Jan-21
1,900 30,000
EU Brazil 2007 2009 2011 2013 2015 2017 2019
Source: DG Agriculture and Rural Development and Consorcio de Exportadores de Carnes Argentinas ABC Source: Eurostat
Figure 21: Monthly EU, UK and Irish Finished Cattle Prices 2013 to 2021 Figure 22: Single Suckling and Cattle Finishing Gross Margin per hectare 2016-2020 and
Forecast for 2021
550 600
2016 2017 2018 2019 2020 2021f
500
500
450
Euro/100 kg cwe
Euro per hectare
400
400
300
350
300 200
EU UK IRL
250 100
200 0
Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Single Suckling Cattle Finishing
Source: Source: Teagasc NFS 2016-2020 and Author forecast for 2021’
Source: DG Agriculture and Rural Development, AHDB and ECB
Situation and Outlook July 2021 17BEEF
Figure 23: Cattle Finishing Gross Output, Direct Costs and Gross Margin per hectare
1,400
1,200
1,000
euro per ha
800
600
400
200
0
2016 2017 2018 2019 2020 2021f
Direct Costs Gross Output Gross Margin
Source: Teagasc NFS
Figure 24: Long Term trends in Dairy and Suckler Cow Inventories (December)
1,600
1,400
1,200
000 head
1,000
800
600
Dairy Cows Suckler Cows
400
200
1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020
Source: Eurostat
Situation and Outlook July 2021 18SHEEP Situation and Outlook July 2021 19
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
Neutral Neutral Neutral Neutral Positive Positive Negative Positive Negative Negative Positive Positive
Outlook is for stable EU sheep meat demand Heavy lamb prices in the For the period January Direct costs of 2021 margins earned
indigenous EU supply. is stable, so that lower EU for the year to date to May 2021, total production on Irish sheep from sheep production
World demand, driven supplies is reflected in are 16% higher than in sheep slaughter is farms are dominated by are forecast to increase
mostly by China, is higher prices. 2020, and for the year as almost 9% lower when concentrate, pasture and compared to 2020, due
absorbing more of NZ EU sheep meat exports a whole are forecast to compared with forage costs. mainly to higher sheep
& Australia output. are heavily affected by remain ahead of 2020 corresponding period in Owing to weather and lamb prices.
Further augmented by the trade relation with prices. 2020 at sheep export impacts on grazing Direct costs of
large correction in UK UK. Irish prices for the year to premises. conditions and below production on sheep
production, lowering High UK domestic date are almost 30% Total sheep throughput average grass growth, farms are expected to
supplies on EU market. prices, are reducing higher than in 2020, in Ireland, for the year use of feed is expected to be much higher in 2021.
With stable EU British lamb price remaining well above the January to May, is just be well ahead of 2020 In 2021, the net margin
production, EU sheep competitiveness in EU 5 year average price over 1.30m, while on levels. from mid-season lamb
meat market face and has put volumes (2016-2020). tonnage basis (cwe) For the year to date, production is forecast
global & domestic under pressure. With the seasonal this equates to 27.5 up fertiliser, feed and fuel to almost double to
supply shortages. Overall for 2021 year, a reduction in lamb prices to June, down 11% on prices have been higher circa €315 per hectare.
Continuing trade decline of circa 5% in underway following the corresponding period than in 2020. The average gross
friction between UK & EU exports is expected. Eid festival, lamb prices for 2021. Overall, the large margin per hectare is
EU has put volumes for 2021 as a whole, are Below par grass increase in fuel prices, forecast to increase by
under pressure. UK forecast to average growing conditions has fertiliser prices and feed over one third to
sheep meat exports to approximately 25% higher been another negative price coupled with feed €825/ha.
EU, have declined a than in 2020. contributing factor. use increase, is expected Incomes on sheep
quarter year on year. to lead to an 8% increase farms are set to
Year to date EU lamb in total costs of increase by more than
imports are expected production for 2021. 40% in 2021, due to
to be 25% lower growth in output value,
compared to 2020, more than offsetting
almost entirely driven higher total costs of
by lower imports from production.
NZ & Australia.
Situation and Outlook July 2021 20SHEEP
Figure 25: EU Sheep Meat producers (‘000’s slaughtered heads) Figure 26: Weekly Irish Lamb Prices 2021, 2020, 2019 and average 2016-2020
900
2021 2020 2019 2016-2020
Others
22%
800
Spain
euro/100 kg cwe
27%
700
600
Ireland
9% 500
Romania 400
France 18%
12% 300
Greece wk1 wk5 wk9 wk13 wk17 wk21 wk25 wk29 wk33 wk37 wk41 wk45 wk49
12% Source: DG Agriculture and Rural Development
Source: Eurostat
Figure 27: EU Sheep & Goat meat imports* (January – May) 2020 and 2021 Figure 28: Mid-Season Lowland Lamb Gross Margin per hectare 2018-2020 & Forecast
2021
40 900
New Zealand Australia Others
35 800
30 700
euro per hectare
'000 tonnes cwe
25 600
500
20
400
15
300
10 200
5 100
0 0
20202 2021 2018 2019 2020 2021f
Source: Teagasc NFS 2018-2020 and Author forecast for 2021
Source: DG Agriculture and Rural Development
*EU imports shown with UK included
.
Situation and Outlook July 2021 21TILLAGE Situation and Outlook July 2021 22
TILLAGE
Wheat Market Barley Market 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 Negative Positive
?
EU soft wheat Aggregate EU barley Wheat: signals at present Based on provisional In 2021, there has been With higher output
production in production is set to indicate an increase in figures from DAFM the an increase in total prices for wheat and
2021/2022 is expected decrease by about .4Mt harvest price in 2021 cereal area in 2021 has direct costs, on a per barley, coupled with
to be about 133.3Mt, in 2021. relative to 2020. increased by 3.4% hectare basis. Fertiliser significant increases in
with a 14.2 Mt year-on- World barley supply is Barley: signals at present (approx.. 9,000 ha). prices are estimated to yields for the main
year harvest increase. forecast at 153 Mt, also an increase in 2021 has also witnessed have increased by cereal crops, Irish cereal
World soft wheat which is down from harvest price for barley a return to normal about 9%, seed prices output value is forecast
production in 2021/22 159.9 Mt in 2020/21. this year compared to last winter cereal area up by 3% and fuel up to be up in 2021.
is expected to be 730.4 World demand is year. following the difficult over 10% for the year to The straw incorporation
Mt, up 24 Mt on expected to be down July MATIFF futures autumn of 2019. DAFM date. scheme will further
2020/21. slightly this year, with indicate an increase in provisional figures The increase in the area boost output value on
World demand for this year’s demand 2021 harvest prices for indicate that winter of winter crops is specialist tillage farms.
human, industrial and estimated at 154.2 Mt. wheat. cereal area for harvest expected to contribute Overall costs in 2021
feed purposes is World ending stocks are On account green harvest 2021 increased by to a further increase in are forecast to increase.
expected to increase by forecast to be approx. winter barley prices in the 42,318ha, while spring total farm direct costs. However, the forecast
24.9 Mt year on year. 20.6 Mt in 2021/22, Irish market quoted in barley reduced by The upward movement increase in costs is not
World ending stocks are down from 21.7 Mt in mid July 2021 are 15-20% 24,999ha from 2020. in energy prices should expected to be enough
expected to be up by 2020/21. higher than 2020 harvest It is too early to mean an increase in to negate the increase
6.2 Mt in 2021/22 The stock to use ratio of prices. accurately forecast Irish some overhead cost in output value.
compared to 2020/21. world barley is Demand for straw yields for 2021, but items. Average income on
However, stocks are projected to be 13.3%, appears to be strong, early indications are Anecdotal evidence tillage farms in 2021 is
expected to remain low in 2021/22, which is despite higher overall that cereal crop yields suggests that land expected to be in
in the main export down slightly from straw yields in 2021. With will be significantly rental prices have excess of €40,000.
regions. 13.5% in 2020/21. uptake high on the newly higher than in 2020. remained static. However, much
The ending stocks to The EU balance sheet introduced straw First estimates of total Overall, it is estimated uncertainty still
use ratio on the for 2021/22 is showing incorporation scheme, Irish cereal tonnage in that total costs on the surrounds the full yield
international balance a decrease in the straw prices appear to be 2021 are up by over average tillage farm in potential of all crops at
sheet is forecast to be production of barley holding firm. 15% on 2020 levels. 2021 will be up about this stage of the
down slightly to 32.2%. and a slight increase in 10% compared to 2020. harvest.
stocks to use ratio as a
result.
Situation and Outlook July 2021 23TILLAGE
Figure 29: World Soft Wheat Balance Sheet (Mt) Figure 30:– EU Market prices for feed barely July 2013 – July 2021 (€ per tonne)
Decrease in stock/use ratio from 32.4% to 32.2% 250
800
700 200
600
150
500
€/t
400
Mt
100
300
200 FR (Rouen) Delivered to Port
50
100
0 0
Carry-in Production Trade Demand Carry out 13/1/19 13/7/19 13/1/20 13/7/20 13/1/21
20/21 21/22
Source: European Commission, cereals statistics
Source: Strategie Grains
Figure 32: Average Irish Tillage Farm Income (2010-2021f)
Figure 31: World Barley Balance Sheet (Mt)
45,000
Decrease in stock/use ratio 13.5% to 13.3%
40,000
180
160 35,000
140 30,000
Euro per farm
120
25,000
100
Mt
80 20,000
60 15,000
40
10,000
20
0 5,000
Carry-in Production Trade Demand Carry out
0
20/21 21/22 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021f
Source: Strategie Grains Source: Teagasc, National Farm Survey 2010-2020 and Author estimate 2021.
Situation and Outlook July 2021 24Trevor Donnellan
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