Ireland sees “full flow” dairy recovery amid challenges for beef, sheep and tillage

24 Jul 2019 --- While 2019 is not presenting farmers the weather-related challenges of 2018, contrasting income developments are evident across Irish farms, according to the newly published Mid-Year Outlook report from Teagasc economists. “As memories of the spring snow and summer drought of 2018 recede, pasture based livestock farmers are experiencing significant savings in feed and forage expenditure in 2019,” the agri-food authority notes.

These savings are reportedly large enough to more-than-offset increases in input prices. Dairy incomes, which fell substantially in 2018, are set to rebound in 2019 due to savings on feed and strong growth in milk production, notes the Irish semi-state authority responsible for research and development, training and advisory services in the agri-food sector.

While the dairy cow population has only increased marginally in 2019, a large increase in milk yields is being observed, which could see the volume of Irish milk production increase by 10 percent in 2019.

By contrast, the semi-state body highlights that 2019 is proving to be a more difficult year on beef and sheep farms. While feed use has returned to normal levels, there has been a drop in cattle prices for the year to date, with weanling prices down 8 percent and finished animal prices down more than 6 percent relative to the 2018 level. 

While there have been some reductions in input expenditure on beef farms in 2019, the drop in output prices has continued to put pressure on margins. Additional financial support, available through the recently announced Beef Exceptional Aid Measure (BEAM), will contribute to incomes in 2019 on most cattle farms, states Teagasc.

Similarly in the sheep sector, there has been a reduction in feed expenditure in 2019, but there has also been a fall in lamb prices, forecast to average 9 percent less than in 2018. As the reduction in costs will not be sufficient to offset the forecast decline in gross output, Teagasc predicts this will have a negative impact on margins and income in the sheep sector in 2019.

In income terms, tillage farms had a better year in 2018 than the weather conditions might have suggested, with thanks to a sharp rise in cereal prices. By contrast, the report outlines that production conditions for cereal crops in 2019 have been considerably better than in 2018 and yields should show a significant increase on the 2018 level.

However, it is highlighted that input price inflation and a forecast reduction in 2019 harvest prices of 30 percent relative to 2018 will lead to a drop in cereal margins in 2019, in spite of the increase in yields.

While a significant portion of the peak milk delivery season remains, if weather conditions stay favorable the average income on dairy farms could increase by around €12,000 in 2019, taking the average Irish dairy farm income to €74,000, which would represent an increase of 20 percent on the 2018 level, Teagasc notes.

The additional support from BEAM should help to keep incomes on cattle rearing farms stable in 2019, while incomes on the average cattle finishing farm will increase largely due to the receipt of BEAM payments, states the assessment. Without this exceptional aid, incomes this year would only recover a little on last year’s very low levels. 

Incomes on sheep farms are set to fall by 4 percent in 2019, while the average income on tillage farms could drop below €35,000, a decline of over 20 percent, the report concludes.

Edited by Benjamin Ferrer