Milk price in 2020 remained somewhat stable after an initial drop when the first lockdown was announced, with Covid-19 not having as big of an impact as many had expected on the global milk market.
Trevor Donnellan a research officer with Teagasc outlined what can be expected by the dairy sector in 2021.
Global dairy markets
Trevor says: ”That continuing supply growth is expected in 2021, which will be matched by global demand growth [assuming Covid-19 abates].
”We can also expect a relatively stable international dairy price outlook for 2021.
”The Irish dairy sector is expected to see an increase in production by a further 3% in 2021.
”The sector can also expect an estimated milk price of 35c/L [actual constituents vat incl], but production cost are expected to increase.”
Cost per litre 2021
Trevor estimated: ”Farmers can expected an increase in cost of around 3%/L, this is due to an increase in the cost of concentrate feed by 3%.
The cost of pasture and forage feeds will also increase by 6%, this is due to fertiliser prices being up 10% compared to last year.
”The increase in oil and fuel prices also means a 6% increase in the cost of electricity and fuel, other overheads will increase by 3% with other direct cost having no change.”
The figure for net margin is based off that we have normal weather conditions, without a drought seen in pervious years or a wet backend.
Trevor estimated that, milk production will increase by 3% in 2021, compared to 2020. With gross margin per ha to increase by 4% compared to 2020.
However it is not all good news, although milk production and gross margin per ha will increase, net margin per ha will remain the same. This is caused by the increase in cost highlighted above, therefore dairy farmers can expect to achieve a similar income to what they achieved in 2020.