2016 milk price drags down value of milk sales by 7%

The average dairy farm income, across the 15,639 farms represented by the Teagasc National Farm Survey, was €51,809 in 2016.

This figure is a 17% decline on 2015. Despite this, dairy farmers are punching well above the average farm income earned across all other farming enterprises.

The decline in average dairy farm income in 2016 was a result of lower gross output, the Teagasc National Farm Survey revealed.

As a result of a reduction in milk price of 9% in 2016, gross output decreased by 7% year-on-year.

The average total costs incurred by Irish dairy farms amounted to €116,590. A 1% decline in both direct and overhead costs in 2016 resulted in a reduction in total costs by 1%.

Lower prices for feed and fertiliser were partially offset by higher expenditure for veterinary services and hired labour, leaving direct costs down in 2016, according to Teagasc.

Dairy sector indicators

The sector experienced a 5% increase in milk production in 2016. Due to this increase in production, the value of milk sales was down just 7%, despite the 9% reduction in milk price.

However, gross output per hectare declined by 13%, to €3,151/ha.

Total direct costs per hectare fell by 5% to €1,357/ha, seeing efficiency gains across Irish dairy farms.

The average herd size increased from 68 to 72 cows in 2016.

milk price
Source: Teagasc

Distribution of income

Dairy farm incomes decreased by 17% on average last year. This decline was reflected in a significant increase in the number of farms in the lower-income ranges since 2014.

Some 33% of dairy farmers earned an income of less than €30,000 in 2016, compared to 21% in 2014.

The decline in average dairy farm income was also reflected in the lower number of farmers earning over €100,000.

In 2016, 10% of dairy farms earned over €100,000, compared to 20% in 2014.

milk price
Source: Teagasc