Outlook for 2024 more positive, Teagasc finds

Dairy farms and tillage farm incomes are estimated to be down sharply in 2023 while incomes on cattle rearing farms are estimated to be up from the particularly low level of 2022, according to a report by economists at Teagasc.

The report provides the latest estimates of average incomes for various farm types in 2023 and looks to prospects by forecasting farm incomes in 2024.

It finds that incomes on other types of cattle farms (mainly finishers) are expected to be relatively unchanged on the 2022 level, as the positive effect from higher finished cattle prices is offset by lower production volume.

Incomes on sheep farms in 2023 are also estimated to be relatively unchanged.

The report notes that while costs fell back marginally in 2023, there have been significant negative price movements in some farm output prices, especially milk and cereals. It is estimating that the average dairy farm income will be down 60 per cent, bringing it back to €59,000.

Livestock

The average income on cattle rearing farms is estimated to have increased by €2,000 or 24% in 2023 and brings the average cattle rearing farm income up to about €10,300. This estimated increase is largely due to the increase in young cattle prices during the autumn and some declines in input expenditure. The introduction of the Suckler Carbon Efficiency Programme (SCEP), National Beef Welfare Scheme (NBWS) and the Agri-Climate Rural Environment Scheme (ACRES) provides important support to incomes for farms in this system. While weanling prices are estimated to be up 7% in 2023, elevated feed prices and overhead costs mean that the average net margin is in a break-even position.

The average income for other cattle farms in 2023 is forecast to be unchanged at about €18,600. The annual average finished cattle price was 3.5% higher in 2023. Beef production decreased by 4% in 2023.

Sheepmeat output volume is up marginally in 2023 but farms experienced a 3% drop in lamb prices in 2023. The average income on sheep farms in 2023, further supported by payments from the Sheep Improvement Scheme, is estimated to about €17,000.

Tillage

Irish cereal yields will be down significantly for many crops in 2023 due to weather. The spring barley crop and winter wheat crop were particularly affected. Irish cereal harvest prices were also down over 30% in 2023 compared with harvest prices in 2022.

While some cost items such as fertiliser fell in price over the course of 2023, the decline came too late in the growing season to bring significant savings for benefit cereal farmers.

While cereal farmers will benefit from a range of support measures in 2023, the average tillage farm income is forecast to be approximately 60% lower in 2023 and to average around €30,000.

Pig farmers incurred substantial losses in 2021 and 2022 but prices rose substantially in 2023 returning the sector to profitability. However, output volume was down in 2023, reflecting the contraction in the sow herd which occurred in response to the recent financial difficulties in the sector. It is estimated that the margin over feed in 2023 will be 69 cent per kg, which is above the five-year average.

2024 Outlook

Looking ahead to 2024, modest economic growth is projected at the global level, although the increase in the range of geopolitical uncertainties may affect the levels of growth predicted.

Teagasc expects input costs for 2024 as a whole should be lower than in 2023. A large drop in fertiliser prices is forecast in 2024 and smaller reductions in energy prices and feed prices are anticipated. Overhead costs are set to remain relatively unchanged on the 2022 level.

Irish milk prices are likely to rise in 2024 by 10 per cent, meaning the average milk price for 2024 should increase to just under 48 cent per litre.

In terms of cattle prices, the forecast is for a 3% increase in both finished cattle prices and young cattle prices in 2024 relative to 2023, while production costs are also expected to ease slightly.

Irish pig prices are forecast to continue to decrease in 2024 by 11%. A modest drop in production costs in forecast. Irish pig production is expected to increase slightly in 2024 and the margin over feed should drop to 61 cent per kg.

Lamb prices in 2024 are forecast to remain at the 2023 level.

Cereal prices are forecast to be marginally higher at harvest 2024 and Teagasc is optimistic of an increase in yields.

The Teagasc Outlook 2024, Economic Prospects for Agriculture, is available at teagasc.ie.