Teagasc revises 2024 margins down for all sectors

In late November 2023, Teagasc gathered the industry to hear the prospects for 2024. The prospects were positive, but given family farm income for a year as bad as 2023, things could only get better.

Further reduced input prices for feed and fertiliser were set to drive higher margins in 2024.

The forecast at the start of the year was for an average 30% rise in family farm income. These projections were based on normal weather patterns.

Even in late November 2023, the Teagasc economists were predicting family farm income on a tillage farm to be up substantially in 2024 with higher harvest prices and yields.

This week, Teagasc updated where they expect 2024 incomes and margins to land. When spring 2024 came wet and cold, it turned many of the forecasted projections upside down.

Rainfall for February and March was 50% to 100% above the 30 year average. Over a longer period – from July 2023 to March 2024, rainfall is 30% to 40% ahead of the 30 year average.

As a result, predicted family farm income for a tillage farmer has gone from €50,000 in late November 2023 to €20,000 now.

The predicted higher yields and prices have disappeared as the winter crops didn’t get sown, or were poorly established, while spring crops were late-sown.

In reality it’s an emergency income support the tillage sector needs, not for one of the planned support schemes to be taken away. It’s clear why tensions were running high on the straw scheme for the past two weeks.

Predicitons

The predictions for family farm income on the dairy side of the house were similarly positive at the start. However, the Teagasc economists this week are still slightly more hopeful that dairy family farm income will rise in 2024 relative to 2023.

The fact of the matter is that 2023 was barely breakeven, with little or no margin for reinvestment. The reality is that 2024 will be similar.

There will be no profit again on dairy farms, and whatever money is made will just about cover family wages and expenses.

So reinvestment for environmental sustainability is a challenge, and yet Government policy has been to take away many supports from dairy farmers.

The positive that Teagasc predicted at the start of the year in terms of reduced costs at farm level was largely removed by the necessity to buy more inputs given the weather.

Poor first cut silage yields and average second cuts mean that there is a forage scarcity on the horizon, and this is likely to cost farmers as they strive to build a feed reserve.

Milk production is down 6% to 7% to date, and while it might increase from now on relative to 2023, it will still likely be down overall for 2024.

Remember that the 2023 October and November milk supply was a complete write off, so given a fair wind this year, we should see some of the lost milk volumes made up then. We will wait and see.

Income for the cattle and sheep sector again was largely predicted at the start of the year to be increased for 2024, based on lower costs at farm level.

Again the spring weather has put paid to that. Predictions are still slightly more positive for 2024 in total compared to 2023, but a 10% increase of nothing is still nothing.

Survey

We saw last week from Teagasc’s national farm survey work that the average farm income for 2023 was €7,400 for a 34ha suckler farm, and €12,600 for a 44ha sheep farm.

The bottom line and the reality is that all sectors are hoping for favourable weather from now on to allow enterprises breakeven at best for 2024. For the effort and quality food produced on family farms to be resting on ‘hope’ and better weather is no way to run a business.

We can talk all we like about environmental and social sustainability, but if economic sustainability isn’t possible, the others won’t work. Food and farming are resilient, and have been at this juncture before. However, our sector policymakers and politicians need to face the reality with facts not hopeful speculation. Support schemes are critical not optional.