Irish milk production costs have increased by close to double the rates recorded in the world’s other major dairy regions.

A recent report by Rabobank found that milk production costs rose globally by 14% since 2019, with costs increasing by 10% since 2021. This level of increase equates to 5-6c/litre.

However, Rabobank estimated that Irish milk production costs have increased by 30-40% since 2019, compared to 10-20% for the US, Holland and China. Meanwhile, dairy farmers in Australia and New Zealand faced increases of around 25%.

The report puts Ireland’s cost of production at 48-49c/l, up from 34-35c/l in 2019. These costs include the farmer’s labour which Teagasc estimates at 10-12c/l.

Excluding labour, Irish milk production costs come in at 36-39c/l for 2024.

Farm working expenses were the primary drivers of the surging milk production costs, said Emma Higgins, senior agriculture analyst for RaboResearch.

Feed expenses

“Feed expenses remain the largest cost category, with fluctuations in the volume and price of both homegrown and purchased feed significantly impacting total production costs and global competitiveness,” Higgins explained.

Worryingly, Rabobank forecast that the operating cost environment for average milk producers is likely to be more expensive and variable over the next 10 years compared to the last decade.

“Driving this increase are structural factors such as regulatory pressures, energy transition costs, climate change impacts and higher interest rates,” Higgins said.