The income boost forecast by Teagasc for dairy farmers in 2017 must not distract from future challenges to the sector, the Irish Farmers’ Association’s (IFA’s) National Dairy Chairman, Sean O’Leary, said.
Earlier this week, average dairy farm incomes were predicted to rise to between €75,000 and €80,000 in 2017 in Teagasc’s Situation and Outlook forecast.
If this came to pass, it would make it a record year for dairy farm incomes, Teagasc added.
This improvement would be welcomed by farmers, but it was also badly needed, O’Leary explained. This income boost would arrive in the wake of a prolonged period of major cashflow challenges, he added.
Challenges
Moving forward, income volatility would be compounded by: labour shortages; the impact of Brexit; and other global market factors. It is vital that the focus would remain on strengthening farmers’ ability to deal with those challenges, O’Leary said.
Higher volumes, good grass production conditions, a more benign cost environment, as well as recovering milk prices will clearly improve dairy farmers’ incomes this year.
“However, this is the manifestation of the upswing in income volatility, and we must not let a good year distract us from the necessity to put the building blocks in place to support farmers through inevitable income downswings into the future.
“Farmers will need to have greater access to a variety of optional instruments to help them manage extremely variable incomes.
“They will need a greater variety of risk management tools from the industry, with both fixed milk price contracts and the development of other forms of hedging,” he said.
O’Leary explained that taxation will also have a crucial role to play, as the IFA outlined in its pre-budget 2018 submission earlier this year.
The 5-year income averaging scheme must allow farmers to ‘step out’ more than once over the period, if they are not carrying an unpaid deferred tax amount from a previous ‘step out’.
“We also need a voluntary, individualised deposit scheme for farmers which would allow them to put income on deposit and bring it back into the farm enterprise within the next five years, to be taxed in the year it is being drawn down,” he added.
Labour shortage
O’Leary concluded by saying: “Finally, the rapid expansion on some farms has shown a major labour shortage, and Teagasc estimates that 6,000 additional dairy operatives and managers will be needed on farms by 2020.
“It is essential to address this issue through a combination of national promotion and training programmes, to identify and prepare milking parlour-ready dairy operatives and greater flexibility in the issuing of work permits to potential employees from outside the European Economic Area.”