HomeBeefAverage dairy farm income could exceed €86,000 this year
Catherina Cunnanehttps://www.thatsfarming.com/
Catherina Cunnane hails from a fifth-generation drystock and specialised pedigree suckler enterprise in Co. Mayo. She currently holds the positions of editor and general manager at That's Farming, having joined the company in 2015.
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Average dairy farm income could exceed €86,000 this year

According to the mid-year outlook for 2021 produced by Teagasc economists, improving farm output prices are likely to provide an increase in farm incomes in 2021.

The state agency is predicting an increase in spite of rising input prices.

Weather conditions through the first half of 2021 have not been ideal for grass-based systems. However, conditions have favoured cereal crop development and potential yield.

Fuel and fertiliser prices

“The economic recovery from COVID-19 has led to some input price inflation, which has impacted on fertiliser and fuel prices.”

“Price increases for fertiliser and fuel were foreseen and largely reverse reductions in the price of these input items which occurred in 2020.”

Feed prices have also been higher in 2021, reflecting the supply and demand conditions in the feed grains market.

“This increase means that feed prices are at their highest level in over five years. There have been some signs of increased sales volumes for inputs.”

“These increased sales may have been prompted by a desire to purchase inputs ahead of expected price increases.”

Researchers stated the effect of higher input prices have been more than offset by improvements in Irish milk, cattle, and lamb prices in 2021.

“While the harvest is only getting underway, higher Irish cereal prices are also looking extremely likely this year.”

The dairy cow population has continued to increase in 2021. The state agency said a “particularly strong increase” in Irish milk production of 6%, or more is likely.

Cattle and lamb prices

Economists stated cattle prices, particularly for finished cattle, have improved in 2021.

This increase will be partially offset by lower support payments in 2021, following two years in which exceptional aid was provided to the sector.

The trend of lower UK and New Zealand lamb exports to the EU, observed in 2020, has continued into 2021.

“This has created opportunities for Irish lamb exports. As a result, Irish lamb prices, which were already at a high level, have surged further in 2021, with prices forecast to be more than 25% higher than in 2020.”

“While direct costs of production on Irish sheep farms will be higher in 2021 due to higher feed, fertiliser and energy prices, margins and incomes for Irish sheep farmers are forecast to grow strongly in 2021 due to the increase in lamb prices.

Farm incomes: Tillage 

For Irish cereals, favourable weather conditions at sowing meant that there has been an increase in the area allocated to the typically higher-yielding winter crops for harvest in 2021.

Due to more favourable weather at the critical plant development stage, expectations are that yields for Irish cereals in 2021 will be up considerably on those achieved in 2020.

Given international supply and demand dynamics, Teagasc expects cereal prices to increase significantly at harvest 2021 for the main Irish cereal crops, compared to harvest prices paid in 2020.

Forward contract prices on offer at present, coupled with expected yield increases, will likely lead to a “significant” increase in cereal gross output on farms in Ireland in 2021.

Furthermore, straw prices also appear to “be holding firm”. The addition of support from the newly introduced straw incorporation scheme will also boost tillage farms.

Whilst there will be some pressure from higher cereal input expenditure, this will be insufficient to balance out the projected output value increase in cereals.

“A large increase in cereal margins and incomes in 2021 is now expected. The average tillage farmer is expected to make an income in excess of €40,000.”

Farm incomes: Dairy 

The state agency highlighted that the average income on Irish dairy farms in 2021 could exceed the record of €86,000 in 2017.

It acknowledged that while a portion of the peak milk delivery season remains, it has based this outlook if weather conditions remain favourable and milk prices hold.

Cattle and sheep farms

The average income on Cattle Rearing farms in Ireland is forecast to increase by 5% (€9,500) in 2021. Besides, incomes on Cattle Other farms are forecast to increase by 4% (€15,300).

Incomes on sheep farms are set to be up by over 45% in 2021, to more than €27,300. This is due to exceptionally strong growth in output value despite higher production costs.

This results from the “most positive lamb” price dynamics, which are set to continue, with global prices having risen substantially.

Overall, the average farm income in 2021 across each of the farm systems is likely to be higher than anticipated at the outset of the year.

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