Dairy farm incomes in Ireland have jumped to record levels on the back of a global surge in milk prices. According to farming agency Teagasc, the average dairy farm income is estimated to have jumped by 50 per cent to €148,000 this year.
Irish dairy farmers have benefited from a 44 per cent increase in milk prices due to the lack of growth in global milk supplies this year.
That was enough to outweigh an 8 cent per litre (30 per cent) rise in milk production costs, the agency noted in its latest economic outlook report.
Dairy has traditionally been the most profitable segment of Irish farming. Since the lifting of EU milk quotas in 2015, the sector has ramped up production significantly.
“Irish milk production in 2022 was, more or less, in line with the 2021 level, with dry conditions over the summer of 2022 limiting grass availability,” it said.
Teagasc said milk prices were likely to fall by 15 per cent next year as growth in global milk production resumes and the rate of growth in demand eases. While dairy farm incomes are forecast to be lower in 2023, the forecast average dairy farm income of €104,000 would still be one of the highest recorded, it said.
While dairy sector incomes dragged the overall average higher, most farming enterprises – cattle, sheep and pig farms – are estimated to have experienced a decline in earnings this year on account of higher input costs, Teagasc said.
Incomes on cattle rearing farms are expected to show a 20 per cent drop during 2022, with higher production costs offsetting any benefit from higher cattle prices.
This has brought the average income on a cattle rearing farm down to €8,700, even with the benefit of the Fodder Support Scheme on farm incomes.
The average pig farm will have incurred losses approaching €422,000 in 2022, the agency said.
“In 2022 farmers faced considerable uncertainty relating to input and output prices which had an impact on production decisions,” Teagasc said.
“This uncertainty was largely driven by Russia’s illegal invasion of Ukraine, which had immediate consequences for the energy, fertiliser and feed markets and subsequently also had an impact on farm output prices,” it said, adding that weather conditions in 2022 were unusual, with exceptionally dry conditions over the summer having a negative impact on grass growth, but generally benefiting cereal production.