A challenging year for beef, sheep and tillage farmers but dairy recovery in full flow
Incomes on dairy farms will continue to race ahead of other farm enterprises this year, according to Teagasc's latest forecast.
Average dairy net margins in 2019 could be up by as much as 18pc per litre or 28pc per hectare on the back of reasonable prices and lower costs.
In its Situation and Outlook forecast for 2019 it says an average dairy farm income of about €74,000 in 2019 (+20pc) is likely.
It notes Irish milk production for H1 2019 is up substantially compared to the same period last year. An increase in Irish milk production of around 10pc in 2019 is likely.
While it says Irish milk prices fell slightly in Q1 of 2019, the reduction has been limited.
Lower than anticipated growth in global milk production has limited the prices drop. For the year as a whole, a reduction in the Irish milk price of about 5pc is envisaged.
One of the major contributors to increased dairy margins in 2019 will be lower costs.
It has been a normal production year, with no weather extremes. Feed use in 2019 will be well down on the very high 2018 level.
Despite the fact that feed and fertiliser prices in 2019 are higher than in 2018, total production costs for 2019 are forecast to fall by 6pc per hectare or 14pc per litre on the average dairy farm.
In the beef sector finished cattle prices are forecast to be 3pc lower in 2019.
However, costs of production are set to decrease in 2019. A significant reduction in feed usage is the main factor in reducing costs. Feed prices are forecast to be the same in 2019 as in 2018.
Teagasc says output value is forecast to increase in 2019 primarily due to the Beef Exceptional Aid Measure (BEAM).
Lamb prices are to date 7pc lower in 2019 compared to 2018.
Teagasc says this reflects lower prices in the EU for heavy lamb, which are forecast to persist over the remainder of 2019.
It says the forecast reduction in costs in 2019 is insufficient to offset the negative impact of lower output prices on gross margins.
In 2019 gross margin per hectare is forecast to decline by 4pc to €610/ha.
In the tillage sector, the increase in cereal yields in 2019 is unlikely to be sufficient to compensate for the decrease in cereal and straw prices. Therefore output value per hectare will be reduced on the 2018 level.
With costs increasing by 3pc, it is estimated that average family farm income on specialist tillage farms in 2019 will be down about 20pc on the 2018 level.