A report recently released by the European Milk Board (EMB) details a cost comparison for the cost of production vs. farm gate prices being achieved in a number of European countries.
Since 2013, the EMB has published its results for a cost comparison of milk production in the EU.
According to the EMB: ”these figures provide detailed and conclusive evidence about the situation and evolution of costs on dairy farms in the EU.”
EMB report
The report compares prices being paid in eight European countries, based on a milk price in c/kg.
The eight countries used in the price comparison are:
- Belgium (BE);
- Denmark (DE);
- Germany (DK);
- France (FR);
- Ireland (IE);
- Lithuania (LT);
- Luxembourg (LU);
- Netherlands (NL).
In the eight EU Member States included in the study, the farm-gate milk price was below the EU average of 34.52 c/kg.
Compared to milk production costs, the variation in milk prices was only 1.2 (28.79 c/kg in LT to 34.11 c/kg in DE).
This wide gap between costs and prices means that a shortfall of up to 51% was experienced in some countries. On average, the shortfall on EU farms was 24%.
Ireland
Looking at Ireland, we can see that the cost to produce one kilo of milk had risen to 34.21c/kg, as of 2019.
The rise in cost can mainly be attributed to increasing feed costs following the severe drought in 2018.
While based off the EMB figures, the farm-gate milk price in 2019 was only 31.26 c/kg – this represents a shortfall of 9%.
From 2015 to 2019, an average Irish dairy farm generated a revenue of 33.38c/kg from the milk price and Common Agricultural Policy (CAP) payments relevant to milk production.
While the costs for farming inputs and general operating costs were 21.54c/kg over the same period.
According to the report, Ireland is in a better position than other milk producing countries within the EU, due to our lower cost of production.
This means that Irish farms, on average, were able to cover the labour costs calculated for a family farm using the income variable.
The income variable (12.07 c/kg) for 2019 was calculated on the basis of an hourly wage of €22.66 (including employer contributions).