Mixed fortunes for Irish farmers in 2024
A new report by economists at Teagasc provides an updated forecast on the average margins and incomes expected across the agricultural sector in Ireland for 2024.
Irish agriculture in 2024 faces a mix of challenges. The year to date has been marked by difficult weather conditions. There was a delayed start of the grazing season and grass growth was below normal through the peak of the grass production season. This has had a negative impact on farms producing milk, cattle, and sheep in Ireland. Meanwhile, the shift from winter to spring cereal crops, necessitated by the challenging planting conditions, is expected to result in lower yields for Irish tillage farms this year.
On a positive note, input prices for fertilisers and animal feed have decreased in 2024, although their usage in Ireland is expected to increase compared to 2023.
Dairy
Irish milk production volume in 2024 is currently running 6% below the 2023 level, mainly due to the late start to the grazing season. Some of this production deficit should be overcome over the rest of the season, particularly if cows are not dried off early, as they were in 2023. Nevertheless, Irish milk production for the full year is still likely to be below the 2023 level.
Dairy farms should experience an increase in incomes in 2024. Milk prices will be higher, perhaps by as much as 7%. While the price of purchased inputs has fallen, usage levels for feed and fertiliser may be higher due to poor grass production conditions.
Overall, the cost of production on dairy farms is likely to be slightly lower, further improving margins compared to 2023. An average dairy margin of 10 to 11 cent per litre is likely, which would represent a 3 to 4 cent per litre increase on the average for 2023. The average dairy farm income is therefore forecast to improve in 2024.
Cattle farms
Incomes on cattle rearing farms are expected to rise in 2024, driven by live cattle prices and slightly reduced production costs, in spite of higher usage levels for feed and fertiliser. For cattle other farms, including finishers, the outlook is for slight improvements in income on the 2023 level. Finished cattle prices are again seasonal in 2024, but the annual average price is forecast to be slightly higher relative to 2023. The average weight of finished cattle continues to decline in 2024 and follows the trend of the last three years.
While feed and fertiliser prices have decreased, the overall reduction in production costs will be modest. Stable cattle prices mean that an improvement in margins is likely. However, given the importance of support payments as a share of income in these systems, the improvement in margins is unlikely to deliver a significant increase in incomes.
Sheep
Sheep and lamb prices will be higher in 2024 than in 2023, reflecting tighter supply conditions within the EU. The improvement in output prices, along with a decrease in costs, will support higher margins. The expectation is that for the year as a whole, sheep meat prices will be up to 10% higher than in 2023.
With improving margins from sheep production and continued support from coupled direct payments, sheep farm incomes are expected to increase in 2024.
Tillage
Tillage farms are facing another challenging year in 2024, with market based returns expected to decline on the already low levels achieved in 2023. The late planting of crops in the autumn/winter of 2023 and resultant shift to spring crops are likely to reduce yields in Ireland this year. Furthermore, on account harvest prices for the main cereals at the moment are currently trading at lower levels than prices paid at harvest 2023.
While there is likely to have been some respite in costs of production on a whole farm basis due to lower fertiliser and seed expenditure, these cost savings are not expected to translate to a positive story in whole farm income levels. It is forecast that average income for tillage farms will struggle to surpass the extremely low incomes witnessed in 2023, with tillage farms very much dependent on support payments in a period of extremely low profitability.
Pigs
Irish pig production is forecast to remain profitable in 2024 after a few very difficult years. In 2022-2023 historically high feed and energy costs resulted in financial losses during 2022 and Q1 2023. Since spring 2023, feed and energy cost have reduced and pig prices has increased, with a resultant return to sector profitability. The outlook for the remainder of 2024 is for this profitability to continue as the reduction in the Irish and EU sow herd of 8% which occurred during 2022, has resulted in a tight European pig supply in 2024. A risk to this positive outlook could occur if the Chinese government implements trade tariffs on EU pigmeat imports, in response to the recently introduced EU tariffs on Chinese electric vehicles.
A mixed picture for Irish agriculture
Overall, 2024 presents a mixed picture for Irish agriculture. While dairy, cattle, sheep and pig farms are likely to see improved margins and incomes, tillage farms may face a tougher financial year. Teagasc continues to monitor the evolving situation and will provide further updates as new data becomes available.
All of these income calculations are in nominal terms, meaning they do not account for general inflation and its effect on the purchasing power of agricultural incomes. Although general inflation in Ireland is expected to be 2.3% in 2024, which is closer to the ECB's target level, it still impacts real income.