Teagasc has forecast very strong growth in dairy farm incomes, with largely stable incomes expected for drystock and tillage set-ups, in its mid-point commentary on the economic performance of the Irish agriculture sector for 2017.
Farm production costs have entered a benign period, the agency has announced, with prices for fuel, feed and fertiliser much lower than the figures offered during the commodity prices boom a few years ago.
Apart from fuel prices, which Teagasc expects to average higher than last year, there are no signs of imminent production cost inflation in the Irish agriculture sector.
Farm milk prices in Ireland have rebounded well over the past year. Coming back up from their lowest level since 2009, milk prices are now back to 33c/L and are providing the drive for a continuing rise in milk production – which could be up by 7% nationally in 2017 relative to last year.
With recovering milk prices, a static cost environment and higher milk production, average dairy farm margins could double in 2017, Teagasc says.
Other enterprises
Regarding beef production, the larger cattle population in Ireland is contributing to an increase in beef output in 2017; although slaughter weights are a little down, because of the increasing presence of dairy genetics in the national herd.
Despite the weakness of sterling in the UK, which affects returns from Ireland’s key beef export market, good demand for beef at EU level and growth in exports to non-EU markets should bring about a small beef price increase.
Margins on single suckling farms are predicted to be mainly stable this year due to insignificant change in production costs, while on cattle finishing farms margins will be 11% higher than last year.
Regarding sheep, production is increasing in both Ireland and the EU in 2017; but this is being offset by less imports from outside the EU.
Despite the stable figures for both output prices and input costs, sheep farms should experience an increase in income due to improved farm productivity – which is predicted to raise both the value and volume of output at farm level, as well as bringing about a small 4% rise in gross margin per hectare.
With tillage, lower than expected 2017 yields are likely as a result of unfavourably dry conditions last April. However, Teagasc expects cereal prices in 2017 to be slightly up on last year.
The lower fertiliser prices associated with producing the current harvest will also play to tillage farmers’ advantage. In general, tillage farm incomes are expected to be up slightly this year, largely as a result of lower costs of production.
Commenting on the figures, Head of the Teagasc Rural Economy and Development programme, Dr. Kevin Hanrahan stated: “For the agriculture sector as a whole, overall income is likely to increase in 2017, driven largely by the very strong recovery in incomes on dairy farms.
“Concern remains for prospects in 2018 with ongoing uncertainty relating to Brexit a key issue,” he concluded.