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Bumper year raises dairy farmers' income to €90,000 record high


Dr Fiona Thorne

Dr Fiona Thorne

Dr Fiona Thorne

Dairy family farm incomes have hit a phenomenal average record high of more than €90,000, new figures reveal.

The significant increase was helped by payments for a litre of milk surging by 30pc to 36c a litre. The average dairy farm income is now up by €40,000 over the last year. The boon followed a volatile 2016 that saw milk prices in the doldrums.

Yet the Teagasc Annual Review and Outlook for 2018 warned of headwinds on the horizon with Brexit concerns hanging over the export-dependent agri-industry and overall income likely to fall next year as fuel and input costs rise.

Teagasc economist Trevor Donnellan said he was "not in the speculation game", but major uncertainty remained over the post-Brexit Europe and trade relations with the UK where economic growth is on a downward trajectory.

"Apart from concerns we've been having about exchange rate issues, a slow-growing UK economy is not a particularly positive thing for Irish agri-food exports," warned Mr Donnellan.

Farmers will also face fuel rises in 2018, while electricity prices are expected to go up by 4pc and overall production costs are expected to rise.

Mainly driven by dairy farm incomes, the overall average farm income this year increased by around 30pc to €31,900, compared with €23,500 in 2016.

Teagasc estimated average farm income at just over €29,800 next year, down 6pc.

"We've never seen as dramatic an increase as occurred in 2017, driven very heavily by the dairy story," said Mr Donnellan, with the dairy sector expected to see a 10pc drop in income next year to around €80,000.

The Teagasc economic outlook pointed out the stark differences in the farming enterprises, with margins in suckling cattle enterprises stagnant, while those finishing cattle for beef saw an 8pc rise.

Both pig and sheep farmers also enjoyed higher prices, while under-pressure cereal farmers saw a small pick-up in incomes and yields from crops were also up. The figures show that direct payments from Brussels account for 85pc of family farm income on cereal farms.

However, Teagasc's Dr Fiona Thorne warned the average cereal farmer would continue to struggle to make a positive net margin in 2018. With a declining volume of land being sown with cereal crops, she said another 5pc drop in area planted could be likely.

Irish beef prices are forecast to increase in 2018, amid strong EU demand and a reduction in supplies across the EU. However, the costs of production for beef are also expected to rise.

Yet the margins on sheep farms are forecast to drop from the current levels, while cereal prices are expected to show a slight rise next year. Prices for pigmeat are expected to drop 6pc next year, with an expected rise in the number of pigs on the European market.

In 2018, they expect a higher rate of milk production growth across the key dairy players, milk supplies will surpass demand and the butter price is expected to weaken. The economists pointed out the skimmed milk powder prices remain low and there are the added pressures of the intervention stocks hanging over the market.

Dairy cow numbers will average almost 1.4 million this year, up 350,000 since 2010, with the milk pool up 8pc this year.

However, economist Emma Dillon said increases in milk production to date had been relatively "low cost" yet will become more costly in the future.

"The standout story in 2017 was the very strong butter price and the amazing rise in that in the European context and on the flip side of the buoyant butter market the skimmed milk powder prices were very low," she said, with stocks of powder taken into intervention at EU level.

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