Family farm incomes have fallen by 9% in 2015 and will average approximately €24,000, according to Teagasc agricultural economist Thia Hennessy. There is a better outlook for next year, however, when farm incomes will recover by 5%, rising to €25,000. The forecasts were presented this week in Teagasc’s annual review and outlook. As usual, the different enterprises are running in different cycles. Suckling and beef finishing were the ones to enjoy a worthwhile lift in prices and margins in 2015, while prices for milk, grain and pigs were hit by increased global and EU production. However, that situation will tend to reverse next year, Teagasc forecasts.

Store and weanling cattle prices are forecast to fall 8% and beef cattle 4%, hit by rising volumes of dairy cow beef in the EU – including in Ireland – and higher beef production in the US and Brazil. Teagasc forecasts 5% to 6% price rises for milk, grain, pigs and lamb for next year (see page 8 for details).

Its forecast is that annual average milk price next year will be 31.5c/l, up from this year’s Teagasc figure at 30c/l.

Hennessy outlined the key background influences on farm prices: exchange rates, oil prices, the health of economies and Russia’s trade embargo. The weak euro has helped exports, most significantly with beef to the UK, “but it has inflated input costs”, Hennessy said.

Key inputs including fertilisers and feed straights are priced in US dollars. Oil prices have collapsed, cutting fuel costs, “but it’s a double-edged sword – it means less demand for our food products in oil-producing countries”.

The UK and US economies are performing well and that will continue to boost Irish food exports, she said. The eurozone economies are weak in terms of growth but are improving. Two negatives are the economic downturn in China and the political trade sanctions imposed on the EU by Russia – both of which look set to continue.

IFA reaction

The forecast recovery in milk prices and margins can only happen if the recovery in global markets comes before the end of the Irish seasonal milk peak, IFA dairy chair Sean O’Leary said.

Read more

Full coverage: Teagasc outlook 2016