‘Massive jump’ in labour costs not on the cards for 2018

A “massive jump” in labour costs is not on the cards for 2018, according to the director of Teagasc, Professor Gerry Boyle.

Prof. Boyle spoke to AgriLand following the launch of Teagasc’s Annual Review and Outlook report yesterday (Tuesday, December 5) in the RDS in Dublin.

For 2018, the report forecast that there would be slight upward pressure on some input prices in 2018.

Prof. Boyle said: “I don’t think you are going to get a massive jump in labour costs, for the simple reason that is very hard to source labour.

The big problem last spring was, on some farms, they maybe left it too late to organise themselves and found themselves with a big problem around calving time.

“The labour simply wasn’t available. So the message, I think, is to plan ahead; but also there have to be increases in labour supply. We’re working along with FRS, the Farm Relief Services, to try and identify non-traditional labour sources – like for milking tasks and calf rearing.

“It will take a while for that to build up momentum; but we’re confident enough that we will attract people from perhaps non-farming backgrounds into the sector; there may still be opportunities in Eastern Europe and so on.

“The labour situation is particularly evident on herds of around 100 cows, and there are more and more of those emerging in the last couple of years. It is definitely an issue,” he said.

Outlook for the dairy sector

The dairy sector is in a different position facing into 2018 than where it was 12 months ago, the director of Teagasc explained.

“Last year we were looking at a dairy sector which was recovering a little bit, but prices were still back. Prices have picked up this year with record income levels.

“Prices will be pulled back; probably, we reckon, by 10% – it could be more than that, it’s very hard to predict these things. But, certainly for the next year anyway, it seems that you will get a good return from dairy.

The other sectors; it will be marginal – plus or minus a few percentage points, so relative stability.

Prof. Boyle added that there is a “big concern” around skimmed milk powder (SMP) stocks at present.

“We have 350,000t in stocks – that’s an overhang on the market. That should adversely affect those prices; it’s very hard to predict.

“All the farmer can do is concentrate on what he has control over, which is the level of performance inside the farm gate and there are productivity gains to be had there in terms of grass and breeding and so forth – irrespective of the price the farmers get for their product,” he concluded.