The average income on Irish dairy farms could drop by over 50% this year, compared to 2022, a new report has found.
Teagasc has today (Tuesday, July 25) published a mid-year assessment of its Situation and Outlook for Irish Agriculture for 2023.
The Teagasc economists said that farmers are continuing to battle with substantial input price inflation, mainly due to Russia’s illegal invasion of Ukraine.
This comes against a backdrop of downward pressure on some farm output prices, which will reduce margins this year.
However, Teagasc noted that some data on the volume of input usage and changes in the prices of some farm inputs were not available for the report.
Report
Teagasc said that the average dairy farm income is expected to be €70,000 in 2023, down from over €150,000 last year.
The report said that the average Irish milk price for 2023 is now likely to be down 25% on the average for 2022, when prices reached record highs.
Average milk production costs in 2023 are likely to remain close to the 36c/L average figure recorded in 2022, leaving higher-cost producers in particular with very low margins.
For the second year in succession, no increase in aggregate Irish milk production is forecast.
While dairy cows numbers have increased marginally in 2023, this has been offset by slightly lower milk yields.
Unfavourable weather conditions have also impacted grass growth figures.
The average income on cattle rearing farms is forecast to increase by 15% to about €10,800 in 2023.
This forecast increase is partly due to the introduction of both the Suckler Carbon Efficiency Programme (SCEP) and the Agri-Climate Rural Environment (ACRES) scheme.
Mart prices are expected to be slightly higher in the autumn of 2023.
However, elevated feed prices and overhead costs mean that the average net margin (profit exclusive of direct payments) on cattle rearing farms could remain negative in 2023.
The average income for cattle other farms in 2023 is forecast to increase by 5% to about €19,800 due to higher finished cattle prices.
On an annual basis, total beef production is set to be lower in 2023 relative to 2022.
However, beef production in the third quarter is expected to increase and possibly surpass the levels observed for the same period in recent years.
Incomes
Sheep farms have experienced a 5% fall in lamb prices so far in 2023 and, similar to other enterprises, production costs on sheep farms remain at elevated levels.
Irish prices are forecast to stabilise over the second half of the year and for the year as a whole are estimated to remain modestly positive.
The average income on sheep farms is forecast to increase marginally, by about 5% in 2023 to €17,300.
The average tillage farm income is forecast to be over 50% lower in 2023 than in 2022. This would bring the average income in the system down to around €37,000.
The adverse weather conditions during parts of this year’s growing season mean that Irish cereal yields will be down significantly, with spring barley particularly impacted.
The persistent rain has also had a major impact on harvesting.
Despite the latest closure of the Black Sea routes to Ukraine cereal exports, futures markets are still forecasting harvest price decreases of over 20%.
The report shows that a gradual reduction in feed and electricity costs has resulted in the Irish pig sector returning to a profitable status since May 2023.
This followed 20 months of continuous losses due to record-high feed and energy prices.
It is estimated that it may be April 2024 before the losses incurred in 2021 and 2022 are fully recouped. These losses have amounted to €520,000 for the average pig unit in Ireland.