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Despite record prices for milk, and decent profits being made in 2022, there is only limited appetite among NI dairy farmers to expand their enterprise in 2023.
The results of our survey at the RUAS Winter Fair on 8 December show that nearly two-thirds of farmers intend to keep milk output the same going forward, with just 27% of respondents indicating they intend producing more milk.
As shown in Figure 1, that compares to the 61% who were still thinking about expansion at the 2021 Winter Fair.
Over the last five years the number thinking of expansion has averaged more than 50%.
The 2022 response is the lowest we have ever received in over 15 years of asking this question in a survey at the event.
On only one previous occasion have less than 40% of dairy farmers indicated that they intend expanding output – that came in 2015 at a time when milk price had slumped below 20p/l, when just 32% said they intended increasing production. In the following year NI milk output fell 3%, which was the only blip seen in a period of sustained growth since 2009.
Also of note in the 2022 response is the 8% of farmers who suggested that their intention was either to reduce output or quit milking cows altogether – normally this figure is below 5%.
Output
Looking at milk production during 2022, monthly figures to April 2022 were all up on the previous year.
However, since then, the impact of record input costs has kicked in, and it now looks likely that 2022 production will end up slightly down on 2021. Our latest survey suggests that a further drop is likely in 2023.
Much of that will depend on milk prices, with the message given by processors at the 2022 Winter Fair that price corrections will happen in the new year, and base price could drop below 40p/l as the year progresses.
Despite that, most respondents to our survey remain more optimistic (see Figure 2), with 43% expecting 2023 prices to average 42 to 46p/l, with a further 18% thinking prices will average over 46p/l. In our experience, farmers in our survey tend to under-estimate prices for the year ahead – we can only hope they have done so again.
Range
When asked what milk price they need to receive in 2023 to make their business financially sustainable, there was a range of responses from 30 to 56p/l, with the average at 43p/l. That is up significantly on the 32.3p/l from the same survey in 2021.
If prices do come back to around 40p/l, it will be interesting to see how farmers respond. When prices slumped in late 2014, the initial response was to produce more milk in an attempt to maintain cash coming into the business.
Majority have some fertiliser secured
Our 2022 survey suggests most NI dairy farmers have heeded warnings from the autumn about the potential for fertiliser to be in short supply next spring, and have stocks in store (see Figure 3).
Only 20% have no fertiliser bought, while across the remaining farmers there is a fairly even split between those who have enough to get through the spring, or most of what they need for the year as a whole.
Most farmers open to doing carbon audits
Given the amount of unfair criticism directed at farmers for contributing to climate change, and with much of the science not yet fully understood, perhaps it would be no great surprise if farmers are hesitant to get on board with carbon audits.
However, of those dairy farmers who completed our survey, the majority indicated that they either have an audit done, or are open to doing it in 2023 (see Figure 4).
That leaves one-third who said that they need more information before participating, and only 14% who said they are not currently interested in taking part.
Clover
As part of our survey we also asked farmers for their views on two key areas that are certain to get a lot of attention in 2023 and beyond.
The first was on their attitude to clover.
Just under one-third indicated that they already have clovers in their grazing swards. A further 18% acknowledged that they don’t have the knowledge and skills to grow clover, while 33% said that the lack of clover-safe sprays, and risk of bloat, were big factors in their reluctance to grow more clover swards.
Only 20% said that they did not believe clover or other legumes had a role on their farm.
Other crops
We also asked farmers whether, to make their farm more environmentally sustainable, they would consider changing land use on their farm, whether to grow some trees, energy crops or more of their own feed.
The most popular option was to take some land out of grass to grow crops that could potentially displace concentrate feed (39% of responses).
However, nearly one-third said they would be willing to plant some land in trees, while 18% said they would be interested in growing an energy crop (such as willow) or selling a crop to an anaerobic digester.
SHARING OPTIONS: