‘Ireland still one of the lowest cash cost producers of milk internationally’
Ireland is still one of the lowest cash cost producers of milk internationally, according to a recent Teagasc report on the competitiveness of the main sectors in Irish agriculture.
A detailed report and analysis of trends in the main sectors in Irish agriculture was published by Teagasc as part of an international workshop on measuring international competitiveness and efficiency in agriculture.
The workshop took place this week in the RDS in Dublin as part of the UK’s Agricultural Economics Society’s (AES) annual meeting.
Profitability, costs of production, value of output and some partial productivity indicators (such as milk yield, stocking density, cereal yield, labour productivity) were examined in this study.
The primary source of data used was the Farm Accountancy Data Network (FADN), which was published by the European Commission.
The analysis has reaffirmed the competitive advantage associated with the Irish dairy farming system in particular, according to the report.
Irish dairy farms continue to exhibit relatively low cash costs of production when compared against key EU and international competitors, it added.
In the past, cash costs in Ireland were one of the lowest amongst the key EU dairy-producing regions, at €2.7/kg of milk solids. This was substantially lower than countries such as the UK, France, the Netherlands, Germany and Denmark, Teagasc Economist Dr. Fiona Thorne said.
Our latest research shows that, based on a total cost competitiveness index, we are finally beginning to see our total economic costs reduce in an international context – due to increases in scale.
Meanwhile, the inter-EU analysis carried out has illustrated the importance of decoupled payments for Irish farmers; with the beef and sheep sectors in particular exhibiting higher cash costs as a percent of market-based output compared to key EU counterparts, Dr. Thorne said.
Irish beef sector
One of the co-authors of the report alongside Dr. Thorne, Teagasc’s Anne Kinsella, believes one of the implications of the current study is the potential hard-hitting impact Brexit could have for Irish beef farms.
“The current study has shown that relatively high cash and total economic costs of production are evident for Irish beef, with costs much lower in regions such as Brazil and Argentina.
This could have profound implications on the competitiveness of Irish beef on UK markets in a more liberalised trade environment post-Brexit.
At the launch of the report, Dr. Kevin Hanrahan, Head of the Teagasc Rural Economy and Development Programme said similar reports will be published on an annual basis.
“This latest research has put in place an important IT infrastructure which will allow annual updating and publication of these important competitiveness indicators.
“In response to changing policy and market conditions, having an up-to-date handle on how we compare against our key competitors is more important than ever,” Dr. Hanrahan said.
The research which led to the publication of this report was funded by the Department of Agriculture, Food and the Marine’s Research Stimulus Fund.