Farm Ireland
Independent.ie

Saturday 18 November 2017

Dairy farmers' earnings set to hit €2.25bn this year

Teagasc's Laurence Shalloo addressing farmers during Greenfields Farm open day at Clara, Co Kilkenny. Photo: Roger Jones.
Teagasc's Laurence Shalloo addressing farmers during Greenfields Farm open day at Clara, Co Kilkenny. Photo: Roger Jones.

Irish dairy output is on track to break through the seven-billion litre threshold in 2017, with farmers' milk receipts forecast to top €2.25bn.

The milk production lift will also boost dairy farmers' profits, which could increase by as much as €60-70m.

Industry sources expect overall milk supplies to increase by 5-6pc this year, with processors reporting a massive surge in milk deliveries this spring.

Milk supplies totalled 6.79 billion litres in 2016 on the back of increased cow numbers. A 5-6pc increase on this figure this year will take overall milk production well beyond 7.1 billion litres, and possibly as a high as 7.2 billion litres.

This will take Ireland within touching distance of the Harvest 2020 target for dairy output, which envisaged growing production from a base of 4.9 billion litres in 2008-09 to 7.5 billion litres by 2020. "As long as price remains reasonably normalised, we should reach the Food Harvest target somewhere in 2018 or 2019," Teagasc's Laurence Shalloo predicted.

Milk production looks set to increase by close to 25pc in the three years from 2014, the last full year prior to milk ­quotas being abolished, when total ­output was 5.65bn litres.

This additional 1.5 billion litres of milk is worth €480m to the national economy if valued at a received price to the farmer of 32c/l (base price plus bonuses for milk solids).

Even allowing for the higher costs associated with carrying additional cows, the increased revenues generated by this level of expansion should grow overall profits at farm level by around €60-70m based on a margin after labour of 5c/l. "The implication for the rural economy of this level dairy expansion is huge," Shalloo said. However, he pointed out that the dairy sector had been extremely volatile over the last three years and margins could quickly disappear if global markets took a hit.

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Meanwhile, milk processors around the country are reporting double-digit growth in supplies recently as farmers continue to ramp up output.

This has been driven by increased cow numbers, which are forecast to exceed 1.25 million this year - up from 1.15 million in 2014.

The latest weekly figures from ICBF show that dairy cow calvings so far this year totalled 958,622 compared to 932,214 to the same week last year. This is an increase of more than 26,000 cows.


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