Ireland's dairy farmers who have already had serious falls in income and whose numbers are expected to be halved in the next 10 years have received more bad news with the publication of an analysis which showed they could lose 20 per cent more of their annual cash incomes in the near future.
The study carried out by University College Dublin in collaboration with Teagasc, Moorepark, found the combined impact of the reform of the Common Agricultural Policy (CAP) and the implementation of the EU Nitrate Directive could lead to a drop of almost 20 per cent in the income of intensive dairy farmers.
The analysis, which was conducted by UCD economist Anne Marie Butler, showed that a dairy farmer with around 80 cows on 40 hectares (100 acres) could be facing a drop of €15,000 in income.
The expected fall in milk price would lead to an income drop of €10,000, while the implementation of the stocking restrictions in the proposed Nitrate Directive would take a further €5,000 from income.
She told the 1,500 delegates from 94 countries at the International Grassland Congress in UCD, the analysis showed the significant impact the two policy measures would have on the most productive and most intensive group of dairy farmers. "The farm we analysed is currently producing around 450,000 litres (100,000 gallons) of milk and is making maximum use of grass. While CAP reform would have the biggest immediate impact on income, the restrictions on stocking rate imposed by the Nitrate Directive would have a more damaging long term effect," she said.
"As a result of the Nitrate Directive, the farmer would have to reduce dairy cow numbers from 79 at present to 67. In order to produce the quota of 450,000 litres, the amount of concentrate feed would have to be doubled, from 300kg per cow at present to 600kg, leading to a substantial increase in production costs.
"The bottom line would be a drop in farm income from €86,000 in 2003 to €71,000 when the full impact of CAP reform and the Nitrate Directive is in place," said Ms Butler. The UCD economist said the analysis highlights the economic advantages of grass-based dairy farming. The 79 dairy cows at present have average milk yields of 5,500 litres (1,200 gallons). With the stocking restrictions resulting from the Nitrate Directive, the 67 cows would have average yields of 6,500 litres (1,430 gallons) but income would be 7 per cent lower.
Large numbers of dairy farmers are expected to exit the sector over the next decade because of their age profile, the drop in profitability and the amount of work involved in dairying as opposed to the more flexible lifestyle involved in beef, sheep and tillage farming which allows farmers take on off-farm work.