Dairy debt burden hits €1.3bn - Average borrowings total €118,446 in 2018

Debt levels per cow averaged around €1,550 for the 10,500 dairy farmers with sizeable borrowings.. Stock image
Debt levels per cow averaged around €1,550 for the 10,500 dairy farmers with sizeable borrowings.. Stock image
ICMSA's Gerald Quain

Claire Fox and Martin Ryan

Overall debt levels on Irish dairy farms have increased over the last five years and now stand at €1.3bn, according to the latest National Farm Survey.

Sixty per cent of dairy farms had average borrowings of €118,446 in 2018, the national survey showed.

Given the decline in dairy farm incomes by 31pc last year to €61,273, Teagasc's Brian Moran said it was no surprise that borrowing levels had crept up.

And while Ireland still has relatively low debt levels per cow compared to other dairy exporting nations, Mr Moran said the upward trend in borrowing was "something farmers will have to watch".

Debt levels per cow averaged around €1,550 for the 10,500 dairy farmers with sizeable borrowings.

However, when taken across the national herd, debt levels stood at €930/cow.

Teagasc economist Kevin Hanrahan pointed out that debt levels on Irish dairy farms were not a major concern as most of the borrowing was used to finance long-term farm investment, and milk suppliers have the ability to make the repayments.

He added that significant investment was needed for the continued expansion in milk output, which has grown from a base of 5bn litres to an expected 8bn this year.

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"Debt is going up but we believe that farmers have more than enough repayment capacity," Mr Hanrahan said.

"We highlighted it in the survey to remind farmers that they shouldn't lose sight of repayment capacity.

"The level of milk output Ireland wants to achieve over the coming years will only happen if farmers invest. If we want to grow, farmers have to invest in things like milking parlours and roadways."

Overall farm debt levels increased by 2pc in 2018, the Teagasc survey found. The average level of borrowing on cattle rearing and sheep farms was €25,735 and €39,924 respectively.

This highlighted the pessimism in drystock farming compared to the optimism in the dairy sector, Mr Moran commented. The average debt on tillage farms stood at €58,521.

Meanwhile, the ICMSA has warned that "dairy farmer anger is growing over the co-ops' milk price policies" after it emerged that Irish milk prices for April were ranked 16th in an EU-wide survey.

The published milk price comparison from the European Commission showed that the Irish April milk price of €32.70/100kg was the 16th highest in the EU. The EU-28 average was €34.52/100 kg.

Gerald Quain of ICMSA claimed: "If Irish farmers received the EU average, a farmer supplying 300,000 litres of milk would receive an additional €5,500 in a full year.

"Co-ops need to be very aware that farmer anger is growing in relation to what they firmly believe have been unjustified reductions in milk prices in recent months that simply represent co-ops cushioning themselves at the expense of their member suppliers."

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