Average dairy farm income of €68,000 in 2020 ‘possible’ – Teagasc

The average net margin for Irish dairy farms in 2020 is likely to be about 10c/L, but this figure will depend on grass growing conditions and input requirement in the second half of the year, according to the Teagasc Mid-Year Outlook for 2020.

In a focus on dairy farm incomes in 2020, the mid-year outlook – published today, Tuesday, August 4 – covered factors in the sector, including: global supply; global demand; milk prices; Irish production; input cost; and Irish farm income.

It was noted that savings on feed, fertiliser and fuel expenditure in 2020 relative to 2019 “will help to offset any decline in milk prices”.

The current forecast is that the average Irish dairy farm could see a net margin per hectare in 2020 on a par with 2019. Early indications are that the average dairy farm income is likely to be in around €68,000 in 2020 – but uncertainties remain, Teagasc said.

However, EU/UK Brexit negotiations continue and any prospect of an adverse outcome could weigh negatively on commodity prices, the report warns.

Input costs fall in first half of 2020

In terms of input costs, feed prices in H1 of 2020 have been 5% lower than in the first half of 2020 and little price movement is anticipated over the rest of 2020, the report states.

Dairy feed sales in the first quarter of 2020 have increased slightly relative to 2019. Overall, feed use in 2020 will depend on late season weather conditions. An increase of 2% per head is assumed, the mid-year outlook notes.

Energy prices in 2020 have fallen due to lower oil and gas prices. Fertiliser prices are down about 9%. However, fertiliser sales are up slightly in the first half of the fertiliser year.

In all, total production costs per litre in 2020 could be down 1c/L or more on the 2019 level, the report says.