Culling 200,000 dairy cows will cost those who remain in milk production around €2,500 per year, on average, in higher processing costs.

New analysis by the Irish Farmers Journal puts the additional processing cost of a herd reduction scheme at around €39m.

However, this figure excludes the downstream impact on the rural economy of cutting Ireland’s dairy output by around 1bn litres, or 11%.

The full impact is likely to cost the economy hundreds of millions of euro.

Minister for Agriculture Charlie McConalogue admitted to the Irish Farmers Journal that a financial impact analysis of reducing the national dairy herd has not been carried out by the Department of Agriculture or Teagasc.

A special working group has been established within the Department to examine the feasibility of a dairy cow cull.

A consultation document from the working group will be sent to stakeholders at the Food Vision dairy group this week.

The Irish Farmers Journal understands, however, that no detail on the cull package will be included in the document.