Boom time for dairy farmers as incomes set to reach record levels in 2017

cows

Dairy farm incomes are forecast to record strong growth this year, as the fortunes of other farming sectors continues to stagnate.

The national farm advisory body Teagasc says costs of production on farms have entered a benign period, with prices for feed, fertiliser and fuel well below the levels seen during the commodity prices boom earlier in the decade.

Aside from fuel prices, which are likely to average higher than in 2016, there are no signs of imminent production cost inflation in the agriculture sector in Ireland.

Irish farm milk prices have rebounded strongly over the last 12 months.

Having been at their lowest level since 2009, milk prices are now back to 33c/L and are providing the impetus for a continuing increase in milk production, which could be up by 7pc nationally in 2017 relative to last year.

With recovering milk prices, higher milk production and a static cost environment, average dairy farm margins could double in 2017.

Average dairy farm incomes are forecast to increase to between €75,000 and €80,000 in 2017, which would make it a record year for dairy farm income.

In the case of beef, the larger Irish cattle population is contributing to an increase in beef output this year, although slaughter weights are down slightly due to the increasing presence of dairy genetics in the national herd.

In spite of the weakness of sterling, which has an impact on returns from Ireland’s key beef export market, strong demand for beef at the EU level and growth in exports to non-EU markets should lead to a small increase in beef prices.

With little change in production costs, margins on single suckling farms will be largely stable in 2017, while margins on cattle finishing farms will be 11pc higher than in 2016.

On the sheep side, production in the EU and in Ireland is increasing in 2017, but this is being offset by a lower level of imports from outside the EU.

Lamb prices in 2017 are likely to average out at broadly similar levels to those observed in 2016, while costs are likely to remain relatively unchanged. In spite of the stable output prices and input costs, sheep farms should experience an increase in income due to improved farm productivity, which is forecast to boost both the volume and value of output at the farm level and lead to a small increase of 4pc in gross margin per hectare.

On the tillage side, yields are likely to be lower in 2017 than had been expected due to unfavourably dry conditions in the month of April.

On the flip side it looks like cereal prices in 2017 will be up slightly on last year.

Tillage farmers will also benefit from the lower fertiliser prices associated with producing the current harvest. Overall, tillage farm incomes are likely to be up slightly this year, mainly due to lower production costs.

By Ciaran Moran from the Farming section in the Irish Independent on Tuesday 1st August  

600 new dairy farmers since quotas ended

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Glanbia is leading the charge, with 280 new milk suppliers since the watershed of April 2015.

More than 600 new farmers have entered dairying since quotas ended in April 2015.

A nationwide survey of co-ops by the Irish Farmers Journal shows a wide range in the number of new entrants, ranging from one to 280 new milk suppliers.

Glanbia leads the way, with 280 new milk suppliers since quotas ended. New entrants to the co-op must sign a milk supply agreement with Glanbia and Sustainable Dairy Assurance Scheme (SDAS) is mandatory. It has designated farm development staff who work with new entrants before they start to supply milk.

The next highest number of new entrants is with Lakeland Dairies, which has added 100 new suppliers since 2015.

Dairygold is not far behind, with 88 new milk suppliers to its roll call since 2015.

Kerry, Aurivo and Arrabawn are in a similar range, with 36, 29 and 28 new suppliers each.

The remaining co-ops – Drinagh, Barryroe, Bandon, Lisavaird, LacPatrick and Tipperary – have 10 or fewer new entrants since quotas ended.

As expected, the pace of dairy expansion accelerated once quota ended, with ICBF figures showing that 120,000 new cows were added to the national herd between June 2015 and June 2017.

Today, the national dairy herd is 40% bigger thanit was a decade ago.

Demand for dairy cows and heifers is strong this year, according to livestock agent David Clarke: “Trade is the liveliest it has been in a number of years. There is a lot of expansion and cows are scarce.

“The weather has been perfect, people are confident and they are holding on to cows.”

He quoted prices of €1,300 to €1,500 for freshly calved first, second and third lactation cows, with in-calf heifers starting to trade at €1,000 and upwards.

Clarke added that he is seeing “quite a few” new entrants putting in a robot for 60-cow herds, while the next step up appears to be 80 to 120 cows.

The biggest new entrants are large-scale 300- to 400-cow herds, such as the two Kehoe family tillage to dairy conversions in Co Wexford.