Dairy farms set for income drop in 2023, report warns

DAIRY farms could experience a substantial drop in incomes in 2023 compared with last year, according to forecasts from Teagasc.

A substantial drop in dairy farm income in 2023 is forecast, with a decrease in excess of 50% on 2022 levels possible. This decrease would bring the average dairy farm income back to €70,000.

The figures are contained in a report by economists at Teagasc, forecasting average margins and incomes likely across the agricultural sector in Ireland in 2023.

Irish dairy farmers benefitted from an increase in milk prices in 2022, but there has been a sharp reduction in milk prices in 2023, as the global milk supply has increased. Average milk production costs in 2023 are likely to remain close to the 36 cent per litre average figure recorded in 2022, leaving higher cost producers in particular with very low margins.

Substantial input price inflation continues, much of it prompted by Russia’s illegal invasion of Ukraine, says Teagasc. Agricultural production costs in 2023 look likely to remain close to the high levels in 2022.

At the same time, there have been significant negative price movements in some farm output prices, which will reduce margins in 2023.

Incomes on cattle rearing farms are expected to rise from a low level in 2022. Incomes on cattle other farms (mainly finishers) are also expected to increase slightly due to higher finished cattle prices, but there remain significant challenges with the continuation of elevated feed prices and the seasonality of beef production. Sheep farm incomes are forecast to remain relatively unchanged on the 2022 level.

In the tillage system, unfavourable weather during parts of the growing season in 2023 has meant that Irish cereal yields will be down significantly for many crops compared to 2022, with the spring barley crop particularly affected. Persistent rain experienced in July have also affected the harvest season.

Irish pig prices have risen substantially over the last 12 months as EU pig production has fallen.

In December a further assessment of farm incomes for 2023, along with income forecasts for 2024, will be produced by Teagasc economists.

See the full Situation and Outlook July 2023 report at teagasc.ie/publications/