Farm Ireland

Wednesday 21 March 2018

Dairy farm incomes to average close to €70,000 in 2017

Milk prices to rebound but beef will suffer predict Teagasc

While milk prices are set to increase, beef prices face a drop
While milk prices are set to increase, beef prices face a drop
Teagasc economist Kevin Hanrahan
Darragh McCullough

Darragh McCullough

Dairy incomes are set to hit record levels again next year on the back of rebounding milk prices and increased output, Teagasc has predicted.

However, beef prices could fall by over 10pc as spiralling numbers of cattle from the dairy herd look set to undermine the market said Teagasc economist, Kevin Hanrahan ahead of the agency's 2017 farming outlook.

He stressed that the 7pc increase in prime cattle coming on stream for slaughter here next year was not a problem confined to Ireland.

"In 2016 we saw an increase in the amount of cull cow beef coming on the market right across the EU, and it will be the same again now with prime cattle," he said.

"Demand within Europe is not expected to be able to increase fast enough to keep up with supply."

The ag economist also noted that a weak sterling would only exacerbate the fall in prices, even if sterling stays in the current range of under €0.90/£1.

Teagasc believe that weaker prices for beef will also weaken prices for sheepmeat.

Pigs and grain

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Meanwhile, prospects in the pig sector are also predicted to suffer as plentiful supplies of cheap maize and grain globally dampen international prices.

The same fundamentals of high stocks of cheap grains following another bumper global harvest will suppress any major recovery in tillage farmers' fortunes.

The drystock and arable forecasts contrast sharply with dairying, which is set to bounce back from an 18 month price trough with a bang.

Dairy incomes

Mr Hanrahan expects another significant increase in milk output, which combined with price forecasts of over 30c/l, are set to push dairy incomes towards averages of close to €70,000.

These levels were last experienced in 2014, when average dairy farm income was nearly €69,000.

However, there is likely to be some questions over the accuracy of the forecasts given that dairy farm incomes in 2016 look set to be significantly ahead of the levels that were predicted by Teagasc just last August.

While average incomes on dairy farmers have fallen by 30pc since 2015, to close to €43,000, they are significantly better than the dire warnings of an 80pc drop issued less than four months ago by the agency.

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