Dairy farmers who ‘sat still’ saw biggest drop in income

With a 17% decline in the average dairy farm income last year, dairy farmers had to increase milk production by at least 50% to maintain a positive income.

The negative impact on income in 2016 was primarily felt by farmers who had “sat still” – either reduced milk output or expanded by relatively less.

Those who expanded by 10-20% saw a 23% decline in farm income; while those who expanded by 30-50%, saw a 9% reduction in farm income.

decline in dairy farm income
Source: Teagasc

Despite the tough market conditions farmers experienced in 2016, with a 9% reduction in milk price, Teagasc reported milk production continued to rise and was up 5% last year.

Since 2014, with the abolition of EU milk quotas in 2015, milk output has increased on 82% of dairy farms in Ireland. However, production increases on individual farms were more modest in 2016 than in 2014.

Some 24% of farms increased milk output by less than 10% in 2016. A further 20% increased production by 10-20%; in comparison to 31% of farms in 2014.

However, according to the Teagasc National Farm Survey, there was a significant increase at the higher end. Some 22% of farms increased milk production by 30% or more, displaying the diversity in the extent of expansion levels on farms over the last two years.

Key parameters

Through a combination of increasing herd size; achieving greater yield per cow; increasing land area; and selling other livestock on the farm, dairy farmers have expanded their enterprises.

Some 19% of dairy farmers had a herd size of more than 100 cows in 2016. Just 10 years ago this proportion was only 3%.

Dairy farms that increased milk production by at least 50% from 2014 to 2016 had an average herd size of 112 cows.

Teagasc’s National Farm Survey looked at the percentage change in key parameters on dairy farms from 2014 to 2016. The degree to which key parameters changed varied according to the degree to which milk production increased.

Farmers who increased milk production by at least 50% from 2014 to 2016 increased herd size by 51%; productivity per cow by 15%; and land area by 8%.

decline in dairy farm income
Source: Teagasc