Dairy farmers ‘may see income halve in 2015’

Minister denies farmers may be forced to quit

Dairy farmers could see their incomes halved next year, while incomes across the sector could drop by 25% due to plummeting milk prices.

The Teagasc forecast has stunned the farming community and could lead to dairy farmers average incomes dropping from an average of around €60,000 to just €30,000 next year.

It predicts that the profit margin for 18,000 dairy farmers will fall to just 2c per litre — an 82% drop. Teagasc said the wider impact of falling milk prices could mean that incomes across the entire farming sector could fall by a quarter.

President of the Irish Creamery Milk Suppliers Association (ICMSA) John Comer said such a drop in income could force some dairy farmers out of business, which would hit every parish in the country with consumers ultimately paying the price at the checkouts.

Mr Comer met with EU agriculture commissioner Phil Hogan in Brussels on Tuesday and called for him to increase the EU intervention price for milk to stave off a major crisis for rural Ireland in the next year.

The EU milk quota system is set to end at the end of March next year. This means dairy farmers will be free to produce as much milk as they wish and the sector here is currently preparing for a major expansion drive.

Teagasc economist Trevor Donnellan said that following several years of “very good incomes on dairy farms”, the drop in incomes was an unwelcome but expected development.

The past year has seen a surplus in dairy products on the international market but the negative effect on prices would be temporary. Lower milk prices will lead to a slowdown in the expansion of milk production globally through 2015 and the market would start to recover in the latter half of the year.

“Volatility in dairy prices is now a fact of life and farmers are taking steps to manage that volatility. The recent National Dairy Conference demonstrated that farmers, the processing industry, banks and State services are working together to take steps to manage that volatility,” said Mr Donnellan.

Agriculture minister Simon Coveney disagreed with ICMSA president John Comer that some dairy farmers may be forced out of business, and said that the sector had experienced price volatility before and had experienced “all time highs” in terms of dairy pricing in the last two years.

“First of all, I don’t think dairy farmers are going to be forced out of business. What we are talking about here is trying to manage a difficult period, where because of international price volatility, dairy prices are going the wrong way for us at the moment. But, I mean, anyone who suggests we are only encountering price volatility now for the first time doesn’t understand the markets. We have seen a lot of price volatitilty in the last number of years,” he said.

Mr Coveney said the Government was being active in helping to insulate farmers against such a large income drop if the Teagasc projections are borne out, such as engaging with the banks and encouraging farmers to lock in a percentage of their milk into a medium term pricing contract with their co-ops