Farm incomes to climb average of 5pc next year
Published 02/12/2015 | 02:30
Family farm incomes are expected to climb 5pc in 2016, after dairy farmers saw milk prices fall by 24pc this year as they coped with volatility in the post-quota market.
It was a year of contrasts for farmers, as 2015 saw buoyant beef and lamb prices, with incomes up on average €2,700 on the traditionally low-income cattle rearing farms.
Yet farmers with expanding dairy herds suffered an income slump as they were hit by fluctuations on the world markets.
"Mainly due to a 9 cent a litre or 24pc fall in milk prices, the average dairy farm income is estimated to have fallen from around €68,000 in 2014 to €48,000 in 2015," said Trevor Donnellan one of the economists behind the 'Outlook 2016 - Economic Prospects for Agriculture' conference.
Milk production surged 10pc this year since the quota barriers were lifted, with the expansion of Ireland's dairy herd surging ahead of other European countries.
The farm advisory body predicted the average milk price would show a 'modest' recovery from 30 cent per litre this year to 31.5 cent a litre next year.
Teagasc economist Kevin Hanrahan highlighted a recovery in the beef market with the gross margin on cattle rearing farms up 37pc on the lows of 2014, and margins up 33pc in the high-cost cattle finishing business.
However, he warned beef prices were expected to fall next year with a lot more cattle on the ground following the expansion of the dairy herd.
Teagasc economist Thia Hennessy warned the weakening of the euro against sterling was a 'double-edged sword' for Ireland's valuable agri exports industry.
"Over the last 12 months the two biggest issues for the agricultural sector have been exchange rates and oil prices," said Ms Hennessy.
"This is a double-edged sword for the agri sector really as, on the one hand, a weak euro means our exports are quite competitive in non-eurozone countries, for example in the UK," she said.
"We found the weak euro has inflated farm input costs that come in from outside the eurozone," she added.
"The negative side of this is that lower oil prices has dampened demand for oil exporting countries, such as Middle Eastern countries that would buy our milk powders."
Ms Hennessy said the Chinese economy has not performed as well as expected, with poor demand for milk powders, while Russia's embargo on EU produce has also had a knock-on impact on prices.
Following three bumper global cereal harvests, prices for crops have remained low which has hit tillage farmers hard, but also delivered lower animal feed prices.
Teagasc's Fiona Thorne said "phenomenal" crop yields this year helped boost incomes for tillage farmers.