Teagasc has released it Dairy Sector Outlook report for 2022, which is an estimated projection for the sector’s 2022 prospects.
On dairy farms, the weather conditions in 2020, reduced input prices and an improved average milk price resulted in continued production growth and an increase in typical dairy farm income.
In 2020 on average, there was a 13% increase in Family Farm Income (FFI) to €74,249 or €1,237.27/ha, as recorded through the Teagasc National Farm Survey (NFS).
2021 saw input costs on farms rise, with fertiliser prices the most notable increase in the back end of 2021.
Despite this, it is estimated that dairy enterprise net margin/ha increased by 37% (€500) in 2021 to €1,863 or 15.12c/L.
2021 review
Globally, we have seen a slowdown in international supply growth, but an increase of milk prices at farm level.
On farms we saw input costs increase, but net margin and farm incomes still increased in 2021 due to strong prices being experienced, according to the Teagasc Outlook.
Outlook for 2022
So what is the Dairy Sector Outlook for 2022?
2021 saw production costs increase on dairy farms, but this increase was offset by the increase in milk prices and 6% production increase on farms.
Teagasc is estimating the average milk price in 2022 is to remain in line with 2021 levels.
Teagasc also predicts that chemical fertiliser usage may decrease in 2022 as a cost control measure on farms, if normal weather conditions are experienced in 2022.
According to Teagasc, in relative terms, concentrate feed will be cheaper in comparison with grazed grass and feed usage may increase as a result. Overall, a substantial increase in production costs in 2022 seems inevitable.
Teagasc estimates that there will be a 2% increase in production, with a 3% increase in the national herd. However, it is forecast that total production costs will rise by about 13% to just under 30c/L.
The average net margin/ha and net margin/L in 2022 are likely to be down 21% and 23% respectively on 2021 levels, at €1,487/ha and 11.81c/L, which will bring net margins back in line with 2020 when the average net margin/L was 11.54c/L.
