Savings on feed costs is the main driver behind a forecast of improved margins in dairy and beef incomes by Teagasc in its mid-year farm outlook.

With the aid of the €100m BEAM scheme, gross margins on beef farms will rise by €158/ha on cattle finishing farms and by €54/ha on single suckling farms, the report predicts.

Teagasc research officer Dr Kevin Hanrahan said that the figures are as much a reflection of the weather pressures last year as they are of 2019 incomes.

“The impact of lower weanling prices on the costs of cattle purchased in has also to be taken into account and somewhat mitigates the negative impact of finished cattle prices for some farms,” he said.

Dairy farm incomes are expected to improve due to an increase in volumes produced as well as lower feed costs.

However, the outlook for sheep and tillage is more negative.

In the first half of 2019, fertiliser use was higher than the same period last year due to better weather, higher stocking rates and reduced feed usage.

Fuel and electricity prices are also higher than last year.

Teagasc’s predictions are based on an orderly Brexit taking place, though Boris Johnson’s appointment as British prime minister this week means the UK “achieving a departure agreement with the EU is even less clear”, according to the report.

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Dairy: a 10% increase in milk volumes, coupled with savings on feed will see dairy incomes rebound in 2019. Depending on weather, the average income on dairy farms could increase by around €12,000 in 2019 to €74,000. Total production costs are expected to fall by 14% per litre compared to 2018.

Beef: finished cattle prices are forecast to be 3% lower in 2019 overall. However, a significant reduction in feed usage is the main contributor to lower costs this year. Excluding exceptional aid payments, the gross margins on cattle finishing farms will increase by €53/ha (13%) and on single suckling farms by €14/ha (4%).

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Sheep: lamb prices are forecast to average 9% lower than in 2018. A 3% reduction in costs this year will not be sufficient to offset the forecast decline in gross output.

Incomes on sheep farms are set to fall by 4% in 2019 to a gross margin of €610/ha.

Tillage: the average income on tillage farms will struggle to reach €35,000 this year – a decline of over 20% on 2018. A forecasted increase in cereal yields compared to last year will not compensate for the fall in grain and straw prices. Costs are expected to increase by 3% year-on-year.