CAP reform and nitrate directive could lead to 20% reduction in dairy incomes
It shows that a combined effect of the reform of the Common Agricultural Policy (CAP) and the implementation of the EU nitrate directive could lead to a drop of almost 20% in the income of intensive dairy farmers.
The analysis, which was conducted by UCD economist Anne Marie Butler, shows that a dairy farmer with around 80 cows on 40 hectares (100 acres) could be facing a drop of €15,000 in income.
It predicts that the expected fall in milk prices would lead to an income drop of €10,000 while the implementation of the stocking restrictions in the proposed nitrate directive would take a further €5,000 from income.
In an address to 1,500 delegates from 94 countries at the International Grassland Congress in UCD, Ms Butler said the analysis showed the significant impact the two policy measures would have on the most productive and most intensive group of dairy farmers.
“The farm we analysed is currently producing around 450,000 litres (100,000 gallons) of milk and is making maximum use of grass,” she said.
“While CAP reform would have the biggest immediate impact on income, the restrictions on stocking rate imposed by the nitrate directive would have a more damaging long-term effect.”
Ms Butler said as a result of the nitrate directive, the farmer would have to reduce dairy cow numbers from 79 at present to 67. In order to produce the quota of 450,000 litres, the amount of concentrate feed would have to be doubled from 300kg per cow at present to 600kg, leading to a substantial increase in production costs.
“The bottom line would be a drop in farm income from €86,000 in 2003 to €71,000 when the full impact of CAP reform and the nitrate directive is in place,” she said.
The UCD economist said the analysis highlights the economic advantages of grass-based dairy farming. The 79 dairy cows at present have average milk yields of 5,500 litres (1,200 gallons).
“With the stocking restrictions resulting from the nitrate directive, the 67 cows would have average yields of 6,500 litres (1,430 gallons) but income would be 7% lower,” she added.
