June 13, 2023

Irish dairy farm incomes could halve due to falling milk prices and rising costs

The incomes of dairy farmers in Ireland are at risk of being halved in 2023 compared to the high levels seen last year due to a sharp reduction in milk prices and soaring production costs, Agriland reported.

According to the National Farm Survey 2022 conducted by Teagasc, the average family farm income (FFI) for Irish dairy farmers surged by 53% to EUR 150,884 (~US$162,000; EUR 1 = US$1.08) in 2022, primarily driven by a significant increase in milk prices.

Data from 15,319 dairy farmers revealed that the average income per hectare (ha) on dairy farms reached EUR 2,332 (~US$2,513) in 2022, marking a year-on-year rise of EUR 794 (~US$855) per ha.

While 2022 was an exceptional year for Ireland's dairy and tillage sectors, the situation has taken a downturn in 2023, said Trevor Donnellan, a research officer at Teagasc.

Donnellan highlighted that milk prices experienced a substantial international surge in 2022, with Ireland witnessing an even greater increase. However, in 2023, Irish milk prices are declining more significantly compared to other European countries due to the previously reached high levels and a decrease in international demand for dairy products.

The research officer emphasized that the persistently high production costs for milk are currently squeezing dairy farm margins in 2023. Donnellan cautioned that average income levels on dairy farms in Ireland could potentially be halved, dropping back to EUR 75,000 (~US$80,800) this year.

Milk prices in Ireland have seen a sharp reduction so far in 2023, returning to levels that are considered "more normal" after the highs of 2022, according to Donnellan.

He said that when comparing the income difference between 2022 and 2023, there will be a significant contrast in both the dairy and tillage sectors during these two periods.

-      Agriland