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Dairy incomes have been ‘underestimated for years’: Teagasc

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Pat Scully rolling grassland at Ballyhyland, Co. Laois. Picture: Alf Harvey

Pat Scully rolling grassland at Ballyhyland, Co. Laois. Picture: Alf Harvey

Pat Scully rolling grassland at Ballyhyland, Co. Laois. Picture: Alf Harvey

Teagasc has been underestimating dairy farm incomes since 2017, it revealed in its National Farm Survey (NFS) update last week.

The NFS is a survey of some 800 farms which are representative of approximately 85,000 Irish farms.

In order to ensure that the sample is representative of the population, Teagasc relies on the CSO’s Census of Agriculture which is carried out every five years. Results from the latest Census of Agriculture became available in 2021 and Teagasc used the new data to update its NFS.

Teagasc said that normally this ‘reweighting’ results in minor and generally unremarkable changes to the NFS results. However, following the removal of the EU milk quota system, there has been a period of considerable change in the dairy sector in Ireland and this is reflected in the newest weighting factors from the Census of Agriculture 2020.

Compared to the Farm Structures Survey of 2016, the Census of Agriculture 2020 indicates that there are fewer dairy farms than in 2016, but that a greater proportion of these farms fall into larger size classes.

As a result, Teagasc said on average these dairy farms produced more output than had previously been estimated.

This, it said, has the effect of adding roughly €1,000 to €5,000 to the previously reported NFS estimates of the average annual dairy farm income over the period 2017 to 2020.

In spite of higher dairy system production costs, which rose by 11pc, Teagasc says a further increase in milk output volume and
significantly higher milk prices resulted in an average dairy farm income of €97,350 in 2021, an increase of 23pc, or €18,300, on the 2020 level.

In the cattle rearing system, which is made up of farms that are mainly specialised in suckler beef production, costs increased by 10pc in 2021. Overall, the average cattle rearing income of €10,927 in 2021 was up by 30pc, or €2,500, compared with the 2020 level. In the ‘cattle other’ system, which comprises mainly of beef finishing farms, but also includes farms selling store cattle, production costs increased slightly in 2021, seeing an average income of €16,416 in 2021, up 6pc.

Production costs rose on sheep farms in 2021, largely due to higher feed prices, but the sector experienced a 16pc increase in the value of farm output, which was driven by higher lamb prices. The average income on sheep farms reached almost €20,500 in 2021, an increase of 14pc, or €2,600, relative to the 2020 level.

Teagasc said the average income on tillage farms rose by 77pc in 2021 to almost €59,000 as a result of particularly good production conditions in 2021, which led to higher crop yields.

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