NI dairy farmers still confident for the future

The results of our annual survey of dairy farmers at the RUAS Winter Fair would suggest that while there is some tempering of expectations, the majority are still optimistic when looking ahead to 2019.

When asked about their future intentions (see Figure 1), just under half said that they plan on expanding milk output in 2019, while the same number said that they intend to produce a similar amount of milk as in 2018.

Compared with previous years, the number considering expansion is down on 2017, but similar to other years.

Therefore, the data suggests that the steady growth of around 2-3% in the NI milk pool seen in recent years should continue in 2019.

Out of the last 10 years, only in 2016 did we see the NI milk pool contract, on the back of a slump in prices seen in 2015 which continued into the first half of the following year. Our survey results from 2015 are in line with this outcome, with only 32% indicating then that they would expand production the following year. It was the lowest figure we have recorded for well over 10 years.

Price

In terms of milk prices in 2019, two-thirds expect prices to average between 24p/l and 28p/l (see Figure 2).

When asked the same question in 2017, farmers back then were slightly more optimistic. A total of 73% said that they expected prices to be in this bracket, with only 9% predicting that prices would go below this level, and 18% thinking prices would be between 28p/l and 32p/l.

In the end, 2018 prices in NI look set to average around 28.5p/l, which is higher than most expected last year. However, it was a year when drought took hold across Europe, keeping production in check, supply in line with demand and helping maintain a firm floor in prices.

Costs

The other important point to note is that farmers face higher costs this year, mainly due to higher concentrate and straw prices. Last year respondents indicated that, on average, they required at least 25.03p/l to make their business sustainable. This year that average figure has increased to 26.5p/l.

Main challenges come from land and labour

Among the questions asked as part of our 2018 survey was what farmers felt was the main challenge to the future of their business. Four options were given:

As shown in Figure 3, most respondents either cited access to land or access to labour as being the most immediate concern.

Only 17% of respondents chose environmental controls, although with tighter environmental rules likely in the future, it could become a more dominant factor in dictating future output from a farm business.

But ultimately, the highly competitive land market in NI at present makes it difficult for any farm to expand sustainably.

The problems attracting labour onto farms have also been well documented in recent years.

One-third would consider milking robots

There has been a significant increase in the number of robotic milking systems on NI farms in recent years.

Of those that completed the survey, 6% indicated that they had already made the switch, a further 8% said that they were actively considering it now, while 20% said that they might consider moving to robots within the next five years.

That leaves two-thirds of respondents who said that they intend to stick with conventional milking parlours into the long term.

Range of views on future support

The final question in the 2018 survey asked farmers for their views on the future of agricultural support in NI.

With the UK government favouring a long-term approach based around public money for public goods, it is likely that future payments will be targeted at agri environment-type schemes.

However, as shown in Figure 4, it is not an approach that finds much favour with the farmers in our survey, with only 13% of respondents indicating that it is something they think should happen.

Instead, 30% would prefer the current system of area-based payments to be maintained, while 35% opted for support linked to production of milk.

However, just under 22% think that there should be no direct payments at all.

While that would be financially very painful for some producers, presumably these respondents believe it could make it easier to access land and expand their businesses.

Winner of the Irish Farmers Journal merchandise

Thank you to everyone who visited our stand last week, and especially those who completed the survey.

All farmers who completed the survey were entered into a prize draw to win some Irish Farmers Journal merchandise. The winner was Mr Campbell Dodds.

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