Overall dairy production increased by around 6% in 2021 and, despite higher input costs, net dairy margins rose by 15.1c/L, while milk prices were up 16% on the previous year, according to Ifac’s Irish Farm Report 2022.
The survey also found – perhaps, unsurprisingly – that 77% of dairy farmers have a positive outlook for their sector, substantially higher than their peers in the other sectors surveyed.
The report, published today (Thursday, April 21), entitled ‘Innovators – farmers embracing change’, contains Ifac’s fourth annual Irish farm survey.
Despite these positives, the farm survey revealed that 13% of dairy farmers are looking to decrease stock numbers in the coming years, and that rising costs of inputs are considered significantly challenging.
Input costs
Production costs – up by between 6-8c/L – were cited by farmers as their biggest challenge.
Fertiliser is up by more than 120%, while feed prices are up over 25%, with further increases anticipated due to economic factors and the ongoing war in Ukraine.
Meanwhile, higher fuel and energy costs, particularly natural gas, are adding to the pressure on margins.
The report found that farmers tend not to shop around when purchasing feed, fertiliser and other key inputs.
This an area that merits more attention in a period when costs are soaring, the report stated.
2022 outlook
While a strong milk price and stable payments are expected to continue through 2022, dairy farmers will need to manage their business conservatively in the coming months, building up a ‘rainy day’ fund and minimising unnecessary capital expenditure until the economic outlook becomes clearer.
Other key findings
- 52% said input costs and 31% said environmental issues were the biggest challenge.
- 33% unsure if they will participate in the Basic Income Support for Sustainability (BISS) environmental scheme.
- 96% see reducing greenhouse gases as important.
Environmental considerations
The research found that that 96% of dairy farmers agree that greenhouse gas (GHG) reduction is important.
While rising cow numbers have been cause for concern in recent years, the research found that an increasing number of dairy farmers are considering decreasing stock numbers over the next five years.
“We believe it is possible to find a balance between environmental and economic sustainability. Many of the farmers surveyed for this report see climate change as an
opportunity for growth in their business with increased efficiency a major attraction,” the Ifac report stated.
“Determining the correct stocking rate, improving herd fertility and executing an efficient breeding strategy are environmentally and economically vital,” according to the report.
Effective grassland management is also critical, it added. In this regard, it pointed to the use of nitrogen alternatives such as clover.
“Reductions in chemical fertiliser application are vital both to prevent nitrogen leaching to water, and to reduce GHG and ammonia emissions.”!
The low-emissions slurry-spreading (LESS) equipment scheme provides an incentive to break away from traditional slurry spreading practices, the report stated.
“Teagasc estimates the additional nitrogen utilised through LESS contributes to financial benefits of €5 per 1,000 gallons – a considerable saving at a time when costs are rising.”