Farm incomes to stay at record levels but expected to fall next year

IRISH farmers’ incomes are set to remain at record levels this year but will come under pressure next year with incomes falling especially in the dairy sector.

A report released by Teagasc economists Trevor Donnellan and Kevin Hanrahan yesterday said an increase in the milk quota and the introduction of the suckler cow welfare scheme will mean that broadly speaking, farmers will not see a dramatic reduction on the record income level in 2007, even though input prices for feed and fertiliser have risen considerably.

“There is a mixed bag of prospects across the commodity sectors for 2009.

“To date there is little sign that any of the main input items, feed, fertiliser and fuel, will drop in price, while it is less clear that some output prices can hold up at 2008 levels,” the Teagasc team said.

They point out that dairy commodity prices have dropped considerably in recent months and this has put downward pressure on the price paid for milk.

“Even if dairy commodity prices hold at current levels into 2009, taking account of the seasonality in production, milk prices for 2009 will be down considerably on the 2008 and 2007 levels.”

This will give rise to tighter dairy farm margins than in 2007 or 2008, although incomes should still be ahead of the 2006 level, they added.

Beef prices have increased considerably in 2008, due to the effective ban on Brazilian beef imports in the EU.

“It would appear that the absence of Brazilian beef from the EU market is set to continue into 2009 and in the short term this will support EU and Irish cattle prices at levels close to those in 2008.

“In the medium term the restoration of South American beef imports into the EU would put downward pressure on Irish beef prices and, given the outlook for higher input costs, lead to reduced margins for beef farmers,” they add.

Irish grain producers have experienced difficult conditions in 2008 due to poor weather during the harvesting period.