The average dairy farm income in 2026 could fall to around €80,000 - down from an estimated €137,000 this year, according to Teagasc economists today (Tuesday, December 2).

The potential drop would represent a 42% decrease on the estimated average dairy income level for 2025 according to economists.

Teagasc today published its Outlook 2026: Economic Prospects for Agriculture report, which sets out the prospects for Irish farmers for next year.

The outlook was produced ahead of the decision on Ireland's bid to secure a new nitrates derogation.

According to Teagasc, its outlook report was compiled on an assumption that the derogation will "remain".

In the report, economists warn that there is "considerable uncertainty" looming for 2026 because of geopolitical and trade-related tensions and concern that some stock market prices may be inflated.

They identify that dairy farmers especially could see a bumpy start to the new year because "commodity prices will be considerably lower than 12 months ago, particularly so for butter".

"Given the seasonality in Irish milk production, any recovery in dairy commodity prices in the second half of next year will limit, rather than reverse, the expected decline in milk prices in 2026," Teagasc economists have warned.

They expect that lower milk prices will prevail through the peak milk production period in Ireland in 2026.

"An annual average milk price of approximately 42.4 cent per litre (c/L) (actual constituents, VAT, etc) is forecast," economists outlined.

However they have also detailed that this could be buffered somewhat because dairy farms should continue to benefit from high cull cow and surplus calf prices in 2026.

Teagasc Outlook 2026

In the latest outlook report Teagasc economist also set out that "at 11.5c/L, the average dairy net margin in 2026 is forecast to be down 45% on the 2025 level".

As a result, they said that the forecast average dairy farm income in 2026 of €80,000 would represent a 42% decrease on the estimated average dairy income level for 2025.

In general, economists believe that "overall limited input price movements are forecast in 2026" which could mean costs will remain at similar high levels.

Although fuel prices are forecast to be lower, fertiliser prices are likely to increase due to the introduction of the EU Carbon Border Adjustment Mechanism (CBAM).

Meanwhile, feed prices are also likely to "fall marginally in 2026". However, according to Teagasc economists today, there is likely to be "some further increase in the prices of other input items".

They expect that general inflation will remain at close to the target level, which should see production costs in 2026 close to the 2025 level.

But economists have warned that "overall, significantly lower income levels are envisaged on Irish dairy farms in 2026".