Irish dairy farm incomes in 2022 are estimated to have averaged out at €148,000, according to Teagasc’s end of year analysis.
The average income was estimated by Teagasc to be €130,000 in October, with continued positive milk prices since then driving estimates 14% higher since analysis two months ago.
Teagasc researchers say this average dairy farm income of €148,000 is likely to be up by 50% on 2021 levels.
However, it’s worth noting that dairy farm incomes are often split between a number of labour units.
‘Unprecedented’ milk price
The Teagasc Outlook report published on Tuesday suggests that dairy farmers have benefitted from a 44% increase in milk prices due to the lack of growth in global milk supplies.
However, Teagasc noted that some farmers were not receiving these higher prices due to fixed milk contracts.
It says average milk production costs increased by about 8c/l in 2022, 30% higher than 2021 levels. These came at a time when milk production in 2022 was more or less in line with the 2021 level, with dry conditions over the summer of 2022 limiting grass availability.
Milk prices were up 44% in 2022, says Teagasc.
Teagasc economist and senior researcher Emma Dillon said the story of “global dairy markets in 2022 was one of stagnant supply and robust demand”, where Irish net margins per litre were up 70% to approximately 23c/l.
She highlighted that the “dramatic” increase in input costs on dairy farms was “more than offset” by the “unprecedented” rise in milk prices.
“Dairy farmers have had the buffer to deal with input cost inflation when other sectors did not,” she said.
2023
Overall, in its predictions for 2023, Teagasc estimates dairy farm incomes will fall by 30% to an average of €104,000. Teagasc director Frank O’Mara described this drop as a return to “more normal” levels.
Dillon said Teagasc predicts average milk prices to drop by some 15% to 49c/l next year.
However, the Teagasc Outlook forecasts that “average milk price in 2023 should still be sufficient to cover the production cost increases experienced over the last 18 months”.
More normal weather and a “slight increase” in cow numbers will see growth in milk production of 4% in 2023, says Teagasc.
Dillon said more normal weather and a “slight increase” in cow numbers will see growth in milk production of 4%. On this milk, she said dairy farmers will make a net margin of 14.3c/l, some 40% of a decrease on 2022 levels.
All in all, despite the anticipated income drop for dairy farmers next year, Teagasc says the average of €104,000 would still be one of the “highest recorded”.
Out of kilter
The Teagasc Outlook notes that with the “sharp increase in dairy farm income of recent years”, the margins seen in the sector are “increasingly detached” from income outcomes for most other Irish farm systems.
“This traditional average farm income measure has become redundant as an indicator of typical farm income performance across the wider agricultural sector,” Teagasc said.
Read more
Beef farm incomes on the rise in 2023 – Teagasc
Irish dairy farm incomes in 2022 are estimated to have averaged out at €148,000, according to Teagasc’s end of year analysis.
The average income was estimated by Teagasc to be €130,000 in October, with continued positive milk prices since then driving estimates 14% higher since analysis two months ago.
Teagasc researchers say this average dairy farm income of €148,000 is likely to be up by 50% on 2021 levels.
However, it’s worth noting that dairy farm incomes are often split between a number of labour units.
‘Unprecedented’ milk price
The Teagasc Outlook report published on Tuesday suggests that dairy farmers have benefitted from a 44% increase in milk prices due to the lack of growth in global milk supplies.
However, Teagasc noted that some farmers were not receiving these higher prices due to fixed milk contracts.
It says average milk production costs increased by about 8c/l in 2022, 30% higher than 2021 levels. These came at a time when milk production in 2022 was more or less in line with the 2021 level, with dry conditions over the summer of 2022 limiting grass availability.
Milk prices were up 44% in 2022, says Teagasc.
Teagasc economist and senior researcher Emma Dillon said the story of “global dairy markets in 2022 was one of stagnant supply and robust demand”, where Irish net margins per litre were up 70% to approximately 23c/l.
She highlighted that the “dramatic” increase in input costs on dairy farms was “more than offset” by the “unprecedented” rise in milk prices.
“Dairy farmers have had the buffer to deal with input cost inflation when other sectors did not,” she said.
2023
Overall, in its predictions for 2023, Teagasc estimates dairy farm incomes will fall by 30% to an average of €104,000. Teagasc director Frank O’Mara described this drop as a return to “more normal” levels.
Dillon said Teagasc predicts average milk prices to drop by some 15% to 49c/l next year.
However, the Teagasc Outlook forecasts that “average milk price in 2023 should still be sufficient to cover the production cost increases experienced over the last 18 months”.
More normal weather and a “slight increase” in cow numbers will see growth in milk production of 4% in 2023, says Teagasc.
Dillon said more normal weather and a “slight increase” in cow numbers will see growth in milk production of 4%. On this milk, she said dairy farmers will make a net margin of 14.3c/l, some 40% of a decrease on 2022 levels.
All in all, despite the anticipated income drop for dairy farmers next year, Teagasc says the average of €104,000 would still be one of the “highest recorded”.
Out of kilter
The Teagasc Outlook notes that with the “sharp increase in dairy farm income of recent years”, the margins seen in the sector are “increasingly detached” from income outcomes for most other Irish farm systems.
“This traditional average farm income measure has become redundant as an indicator of typical farm income performance across the wider agricultural sector,” Teagasc said.
Read more
Beef farm incomes on the rise in 2023 – Teagasc
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