Dairy farmers in the UK can expect a welcome increase in income during 2024, according to a new report from agricultural economists at Teagasc. The report, published today, forecasts milk prices to rise by as much as 7%, contributing to a brighter financial outlook for the sector.
Despite this positive news, the report also highlights a mixed bag for Irish agriculture this year. Challenging weather conditions, including a delayed start to the grazing season and below-average grass growth, have negatively impacted farms producing milk, cattle, and sheep.
The report acknowledges that tillage farms are likely to see lower yields due to the shift from winter to spring cereal crops, a consequence of challenging planting conditions. However, the report also points to a positive development: a decrease in fertiliser and animal feed prices, albeit with an expectation of increased usage compared to 2023.
Income Growth Across Farm Sectors
The Teagasc report forecasts income growth not only for dairy farms but also for cattle rearing, cattle finishing, sheep, and pig farms.
Dairy farms, despite a current 6% decline in milk production compared to 2023, are expected to see a slight improvement in production later in the season. While overall milk production is still likely to be below 2023 levels, the lower cost of production is anticipated to boost margins for dairy farmers. The report predicts an average dairy margin of 10-11% per litre, representing a 3-4 pence per litre increase on the 2023 average.
Cattle rearing farms are also set to benefit from higher live cattle prices and slightly reduced production costs, despite increased feed and fertiliser usage. For cattle finishing farms, the outlook is for modest income improvements compared to 2023, driven by seasonal finished cattle prices and an anticipated increase in the average price relative to last year.
Sheep farm incomes are expected to increase due to improving margins from sheep production and continued support from coupled direct payments. Sheep and lamb prices are projected to be higher than in 2023, reflecting tighter supply conditions within the EU.
Pig farms are forecast to remain profitable in 2024. Reduced feed and energy costs combined with higher pig prices have led to a return to profitability in the sector. The report predicts that this trend will continue, driven by a tight European pig supply resulting from a decline in the Irish and EU sow herd.
However, the report highlights a potential risk from the implementation of trade tariffs on EU pigmeat imports by the Chinese government, in response to recently introduced EU tariffs on Chinese electric vehicles.
Tillage Farms Face Challenges
The report paints a less optimistic picture for tillage farms, which are expected to face another challenging year. Late crop planting in autumn/winter 2023, leading to a shift towards spring crops, is likely to result in reduced yields. Additionally, current harvest prices for key cereals are lower than those paid at harvest in 2023.
Despite some easing in production costs, the report suggests this is unlikely to translate into improved whole-farm income levels. Tillage farms are forecast to struggle to surpass the extremely low incomes witnessed in 2023, remaining highly reliant on support payments in a period of low profitability.
It's important to note that all income calculations in the report are expressed in nominal terms and do not account for general inflation, which is expected to be 2.3% this year.