Milk production costs for farmers supplying milk all year round are expected to increase by almost 11c/l compared to 2021, Teagasc has projected in the National Milk Agency’s (NMA) annual report for 2021.
Costs will be “sharply impacted by the dramatic rise in the prices of fertilisers, animal feed, contractor services and energy as a consequence of the Russian invasion of Ukraine”, it said, adding that general price inflation and rising interest rates will add further to costs.
It warned that many milk producers will consider switching to seasonal production unless they receive adequate financial incentives in their 2022/2023 contracts.
The number of registered milk supply contracts in 2020/2021 decreased to 1,324, down 14 contracts on 2019/2020.
There are 1,184 farmers supplying milk in all-year-round contracts and 140 supplying winter milk contracts.
Since the NMA was established in 1995, the number of registered contracts has reduced by 60% from 3,344 in its first year.
The annual average price paid under all registered contracts was 39.79c/l last year, an increase of 4.30c/l on the average price in 2020.
Meanwhile, bulk milk imports into the Republic of Ireland for processing last year are estimated at 740m litres, an increase of 40m litres, or 6%, on 2020.
“These bulk milk imports were cross-border movements of milk from Northern Ireland and were equivalent to 8% of domestic supplies and to 29% of Northern Ireland’s milk supplies in 2021,” according to the report.
Of this figure, 58m litres were for liquid consumption. Packaged milk imports from Northern Ireland were estimated at 99m litres, an increase of 16m litres or 19% on 2020.
The market share of domestic supplies in the fresh milk market fell from 100% in 1996 to 72% in 2021, while the market share of imports has increased from 0% to 28% in the same time period.
Consumption of fresh milk continues to decline in Ireland, down by 3m litres (1%) to 563m litres last year.
Irish consumers, however, still have one of the highest per-capita consumptions of fresh milk in the world, with the average person drinking 112 litres/year.
Some 67% of fresh milk is packaged in 2l or larger-sized packs, with 33% packaged in 1l or smaller.
The NMA estimates that the average retail price of fresh milk in all pack sizes was 90c/l in 2021, similar to that of 2020.
It said 2021 was a record year for the dairy sector, with gross milk output increasing by 23% to reach €3.5bn and domestic milk supplies increased by 5% to 8.8bn litres.