At this time of year many farmers will sit down to analyse the year that was and look ahead to the year to come.

From a financial point of view, all the indications are that 2024 will be a very profitable year for dairy farming in Ireland.

Having said that, many farmers say that it doesn’t feel like it was a very profitable year, certainly not like 2021 or 2022, the last two good years for dairying.

Part of the reason for this probably stems from the fact that there was a carryover of 2023 into 2024 and when combined with lower than expected milk yields and milk receipts in the early part of the year, cash was tight.

It’s probably not until the last few months that decent cash surplus figures began to appear in bank accounts.

So what to expect in 2025? While milk prices are hard to predict, there is evidence of a slight cooling off in dairy prices which is to be expected as butter prices in particular are exceptionally high.

It is always sensible to be conservative with milk price estimations. I would say that there is absolutely no chance that milk prices are going to stay at 50c/l for all of 2025.

In the same breath I would say that its highly unlikely that milk prices will be at 35c/l or lower for all of 2025.

If making money from dairying is all based on milk price then that’s a risky strategy because there is a lot of risk and volatility in milk price.

Therefore, putting effort into managing costs makes a lot more sense. A key step needs to be to make sure that the farm is well set up to grow high quantities of grass in 2025 and get cows to graze this grass.

Does that mean brushing up on grassland management? Many of these skills are deficient and some grassland management practices are costing farmers a lot of money.

The feed to fertiliser cost ratio has gone out of synch on many farms. Back 10 years ago, the target was fertiliser costs to be twice the feed costs.

That is now almost the other way around as the amount of feed being used has almost doubled, costs of feed have gone up and the quantity of fertiliser has reduced.

While there are environmental gains from spreading less nitrogen, there are environmental losses from spreading less phosphorus, potash and lime on fields with low soil fertility.

I would argue that more needs to be spent on fertiliser in 2025 to improve soil fertility and make applied nitrogen more efficient and to enable the establishment of nitrogen fixing plants like clover.

The maximum amount of chemical nitrogen that can be applied in 2025 is likely to be 214kg N/ha. I would suggest that on well-stocked dairy farms that amount should be used where there is no clover present to maximise grass growth.

Lower amounts should be applied on lower stocked farms or out-farms where the demand for grass is lower.

On top of this, farmers should make the best use of slurry as possible by applying it at the right time, in the right amount and in the right field.

One area that has exploded in costs over recent years is the whole area of service costs. The costs of electricians, plumbers, fitters and mechanics has really exploded as employers struggle to recruit and retain people in these areas.

There is not much scope to reduce these costs because if equipment breaks down, it needs to be repaired.

Ultimately, it’s a case of monitoring repair costs, trying to do as much of the repairs in-house, where possible and

Speaking at Dairy Day in November, Teagasc’s Laurence Shalloo said that the overall target is for costs to be €3/kg MS excluding own labour.

Most of the budgets that I have seen for 2025 are estimating costs to be around €3.40 to €3.60/kg MS, indicating that costs are still substantially higher than the pre-pandemic period.