Most Welsh sheep farms will break even or see profits this year, according to Hybu Cig Cymru (Meat Promotion Wales).
Although production costs continued to rise, prime lamb producers had benefited from significantly higher prices over the last twelve months, chairman Rees Roberts said.
“Welsh beef and lamb generates £400m for the Welsh economy and it is good news that the average farm is now at least breaking even – and that is something I have waited a long time to be able to say.
“Hopefully the industry can respond to the opportunities in front of it. But costs continue to rise and we urge all farmers to examine their costs regularly,” he said.
HCC figures show that prime lamb production costs averaged 159p/kg liveweight, with feed and forage accounting for nearly one-third of that at 53p/kg. However, market returns in 2009-2010 had averaged 161p/kg, allowing most producers to at least cover costs.
The most efficient producers had squeezed costs down to 126p/kg, with market prices allowing them to recover 133% of costs.
Data was collected by the Farm Business Survey in Wales, and drew on figures from 86 farms – 69 hill or upland and 17 lowland flocks.
In the previous year, prime lamb values meant most farms only earned enough to cover 88% of their production costs.
John Richards, HCC’s industry information officer, said: “These are encouraging figures, but we must not be complacent.
“Costs are continuing to rise – on average they increased 7p/kg over the last year. The underlying reason so many more farms are now covering their costs of production is due to the increase in market prices achieved over the year, which has seen the average price rise from 134p/kg in 2008-2009, to 161p/kg this year.
“HCC hopes that farmers will use this report to see where they can make cost savings on their farms and help them boost profits to ensure the longevity of their businesses,” he said.
Download the report here or contact Hybu Cig Cymru for your copy on 01970 625050