Dairy farm incomes could fall by 50% this year to around €75,000 as a result of falling milk prices and continued high input prices, Teagasc’s head of economics Trevor Donnellan has warned.

Incomes on dairy farms soared to €150,884 in 2022, a rise of 53% on 2021.

“Overall when you take into account the reduction in milk price that has occurred and the fact that we’re not seeing a whole lot of movement on the costs side, you are looking at a very substantial drop in dairy farm incomes for 2023,” he told the Irish Farmers Journal at the launch of the 2022 Teagasac National Farm Survey.

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“You are looking at a situation where dairy incomes increased by 50% in 2022 from about €100,000 to €150,000.

“You’ll probably have a 50% drop in 2022, taking it from €150,000 back to about €70,000 or €75,000 territory,” he said.

Donnellan said that high-cost milk producers are probably starting to get concerned about incomes, as there will be a bigger erosion in their net margin compared to lower-cost producers.

Banding

When asked what impact nitrates banding and a potential dairy reduction scheme could have on incomes, Donnellan said that there is pressure to access land to comply with the banding and, where this is not possible, farmers are looking at the “downward adjustment” of cow numbers.

“To this point, it’s an issue for a limited number of dairy farms. There will be some farms who will have difficulties. The concern that might be there as well is some farms that might have had expansion plans could see those plans challenged by some degree,” he said.

The Teagasc official said there needs to be a more broad conversation about what might be feasible in terms of a reduction scheme over the next four or five years.

Teagasc director Frank O’Mara added that the dairy reduction scheme was not something for Teagasc to comment on.