A challenging year for beef, sheep and tillage farmers but dairy recovery in full flow
While 2019 is not presenting farmers with the weather related challenges of 2018, contrasting income developments are evident across Irish farms, according to the newly published Mid-Year Outlook report from Teagasc economists.
The Teagasc Situation and Outlook for Irish Agriculture, July 2019
While 2019 is not presenting farmers with the weather related challenges of 2018, contrasting income developments are evident across Irish farms, according to the newly published Mid-Year Outlook report from Teagasc economists.
As memories of the spring snow and summer drought of 2018 recede, pasture based livestock farmers are experiencing significant savings in feed and forage expenditure in 2019. These savings are large enough to more than offset increases in input prices.
Dairy incomes, which fell substantially in 2018, are set to rebound in 2019 due to savings on feed and strong growth in milk production. While the dairy cow population has only increased marginally in 2019, a large increase in milk yields is being observed, which could see the volume of Irish milk production increase by 10% in 2019.
By contrast 2019 is proving to be a more difficult year on beef and sheep farms. While feed use has returned to normal levels, there has been a drop in cattle prices for the year to date, with weanling prices down 8% and finished animal prices down more than 6% relative to the 2018 level.
While there have been some reductions in input expenditure on beef farms in 2019, the drop in output prices has continued to put pressure on margins. Additional financial support, available through the recently announced Beef Exceptional Aid Measure (BEAM), will contribute to incomes in 2019 on most cattle farms.
Similarly in the sheep sector, there has been a reduction in feed expenditure in 2019, but there has also been a fall in lamb prices, forecast to average 9% lower than in 2018. As the reduction in costs will not be sufficient to offset the forecast decline in gross output, this will have a negative impact on margins and income in the sheep sector in 2019.
In income terms, tillage farms had a better year in 2018 than the weather conditions might have suggested, due to a sharp rise in cereal prices. By contrast, production conditions for cereal crops in 2019 have been considerably better than in 2018 and yields should show a significant increase on the 2018 level.
However, input price inflation and a forecast reduction in 2019 harvest prices of 30% relative to 2018, will lead to a drop in cereal margins in 2019, in spite of the increase in yields.
While a significant portion of the peak milk delivery season remains, if weather conditions stay favourable, the average income on dairy farms could increase by about €12,000 in 2019, taking the average Irish dairy farm income to €74,000, which would represent an increase of 20% on the 2018 level.
The additional support from BEAM should help to keep incomes on cattle rearing farms stable in 2019, while incomes on the average cattle finishing farm will increase, largely due to the receipt of BEAM payments. Without this exceptional aid, incomes this year would only recover a little on last year’s very low levels.
Incomes on sheep farms are set to fall by 4% in 2019, while the average income on tillage farms could drop below €35,000, a decline of over 20%.
The Teagasc Situation and Outlook for Irish Agriculture, July 2019, document is available at https://www.teagasc.ie/media/website/publications/2019/Situation-and-Outlook-for-Irish-Agriculture-July-2019.pdf