The Teagasc Outlook conference took place this week. It didn’t have the anticipation or excitement of a general election count centre, but for farmers and those working in the industry it gives the first glimpse of a vision for 2025, as 2024 draws to a close.The mood is pretty good at the moment. Inflation easing means farm costs are falling. Globally, supply for the main food commodities is tight, so for an exporting nation like ourselves, it shoul dbe easier sell and prices should continue to rise.
The Teagasc Outlook conference took place this week. It didn’t have the anticipation or excitement of a general election count centre, but for farmers and those working in the industry it gives the first glimpse of a vision for 2025, as 2024 draws to a close.
The mood is pretty good at the moment. Inflation easing means farm costs are falling. Globally, supply for the main food commodities is tight, so for an exporting nation like ourselves, it shoul dbe easier sell and prices should continue to rise.
The Teagasc financial specialists are predicting net margin increases for dairy, beef, sheep and tillage farmers.
Two things – the first and most important issue is that ‘net margin’ as defined by this methodology puts no value on owned farm labour, so net margin for this exercise must pay for ‘own labour’ from the farm family.
This then, hopefully, leaves a profit for reinvestment and enough money to pay taxes. It doesn’t include decoupled payments (BISS, eco schemes etc) but it does include any coupled payments (protein aid etc).
Secondly, you could be startled by high percentage margin increases in lamb, beef, tillage and dairy, but remember that is in comparison to 2024 when margins at farm level were extremely low, driven primarily by high costs.
The other conditional element of all this is that the economists are clear they can’t control or predict the weather.
Neither can they control global geopolitical moves or trade agreements between the EU and global partners.
In essence, the Teagasc work is done with the expectation of ‘normal Irish weather’, and a sanitised view of what happens in global politics with the status quo in EU policy.
International
In South Korea alone this week martial law was announced and unannounced, while at the same time a temporary suspension of Irish beef into South Korea was lifted.
Closer to home, the French government faces severe challenges a mere three months after it was established, potentially damaging EU stability.
In terms of EU policy, the nitrates dilemma continues. The derogation, which allows a higher stocking rate at Irish farm level might only last for two, three, four, five or 10 years and has the potential to change how we farm.
It’s a land use issue that affects land price and land availability for all farmers.
So taking all these qualifications on board, what are the Teagasc predictions? On the tillage side, Teagasc’s Fiona Thorne is expecting net margin for the cereal enterprise of €200/ha in 2025. The results show the average cereal-based net margin will be negative on about 30% of specialist tillage farms.
The fact that average net margin per hectare is forecast to increase by approximately €180/ha is a result of slightly improved EU production, more positivity on price as global stocks are low and overall stability on costs despite predicting fertiliser costs will drop further.
On the beef side, there is similar positivity. EU beef production looks set to continue the decline that started in 2018. In the UK, Ireland’s most important market, food marketing body AHDB predicts UK beef production will fall a further 1%.
With a slight fall-off in costs, the prediction is for a net margin increase of about €50/ha for single suckling and cattle finishing to €131/ha and €191/ha net margin respectively.
Lamb price is forecast to remain stable at a higher level as supply is tight. For the main season lamb crop, net margins are forecast to increase 54% to €378/ha.
Dairy
On the dairy side, the average net margin per hectare is set to increase to €2,130/ha, up 35%, as costs ease and milk prices are forecast to continue an upwards movement for the first half of 2025.
The one sector that is forecasting slightly lower margins in 2025 is the pig sector, with Michael McKeown suggesting the margin over feed will drop from 86c/kg in 2024 to 72c/kg in 2025.
As we peep into 2025 for farmers doing their own budgets – what assumptions can they build in? The Teagasc experts suggest output prices for all food commodities look set to remain positive as supply is tight in the EU and globally.
Costs such as fertiliser are predicted to fall 5%, with most other costs stable or down slightly.
After all that we are at the mercy of the weather and global geopolitical movements. Easy.
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