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HomeDairy‘Very high’ milk prices may avoid ‘negative impact’ on farm incomes
Catherina Cunnane
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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‘Very high’ milk prices may avoid ‘negative impact’ on farm incomes

2022 milk prices 

“Very high milk prices may be sufficient to avoid a negative impact on dairy margins and income on most farms,” in 2022.

That is according to Teagasc’s revised ‘situation and outlook for Irish agriculture’ report that the state agency published on Wednesday (April 13th, 2022).

It says that on many farms, higher feed, fertiliser and fuel expenditure in 2022 relative to 2021 should be largely offset by higher milk prices.

It does not envisage an increase in milk production in 2022. However, it says that “favourable or adverse weather” would impact the outcome.

Dairy cow numbers and high input prices 

The report states that “dairy cow numbers will continue to increase”. However, it adds that high input prices and uncertainty relating to the availability of farm inputs could depress milk yields.

It predicts that total milk production costs per litre in 2022 could rise by 30% on last year’s levels. However, it does acknowledge that the “degree of uncertainty that exists” makes this difficult to predict with “high” confidence.

According to Teagasc, the average Irish dairy farm could see a net margin per ha and income level in 2022, broadly in line with the 2021 figure.

However, it says that fixed milk price contracts, paying “well below” the spot milk price, will “adversely” impact incomes on some farms.

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Overall, it states that the impact of the input and output price changes on incomes will be specific to farm circumstances.

All in all, the report states that dairy farmers seem likely to be “least affected”. The state agency pointed to the “extremely buoyant” dairy market outlook for the coming months.

“It is conceivable that Irish dairy farm income in 2022 could be on a par with 2021,” the report states.

However, the report does reveal that some dairy farmers have a considerable amount of their milk in fixed priced contracts set at prices “considerably below current market levels”.

Some other key points in the report:
  • Dairy prices are expected to remain at “unprecedentedly high” levels through this year;
  • According to the report, Irish farm milk prices are “among the highest” in the EU;
  • It predicts that Irish farm milk prices could be 20-30% higher this year than last year;
  • According to Teagasc, higher input costs are set to “put a break” on global milk production growth as 2022 progresses;
  • Possibly of lower global milk growth due to “adverse” weather in South America and New Zealand;
  • The state agency suggests that high oil prices may be beneficial for international demand for milk powders.

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