Teagasc is forecasting a milk price for 2015 of 27c/L, a 28% decrease on the 2014 price.

At the its Outlook 2015 Conference in Dublin Teagasc said dairy markets are expected to remain at very depressed levels into the first half of 2015. It is forecast that milk price will decline by 28% in 2015 relative to the 2014 level, bringing the annual average milk price to 27c.L.

Also at the conference, Teagasc highlighted with the removal of the milk quota, 2015 presents the first substantive opportunity to increase milk production since the introduction of the milk quota over 30 years ago.

It says an intentions survey conducted by the Teagasc National Farm Survey suggests that Irish national milk production will increase by 10%  in 2015 relative to the 2014 level. It is expected that the bulk of this expansion will come from existing cows on existing farmland.

On a per litre basis, Teagasc says  net margins are forecast to fall by 82% in 2015 relative to the 2014 levels, to an average of 2c/L. The annual net margin per hectare is forecast to be €230 per hectare in 2015 assuming no change in output per hectare.

Teagasc says farmers expanding production are assumed to benefit from some economies of scale. Farmers expanding production by 10 percent per hectare will see net margins falling by approximately 76% to an average of €308/ha.

Looking back on the year that was Teagasc also noted that Irish milk prices remained at elevated levels through the peak delivery period of 2014 but fell late in the year, reflecting the depressed world market.

As a result, it says the annual average national milk price for 2014 is estimated to have fallen by 5% to an average of 37.6c/L.

Teagasc also warned today that at the close of 2014 milk production levels were substantially above normal, with a superlevy bill of over €100 million in 2015 now a serious possibility. It estimates that aggregate milk production increased by 4% in 2014.