DairyEconomics

National Farm Survey Shows Worrying Trend of Rising Dairy Overheads

Responding to the dairy results in the 2019 National Farm Survey (NFS), IFA National Dairy Chairman Tom Phelan said the results, which suggested a modest dairy farm family income increase, were less positive than one might think, and needed to be examined closely.

He warned the dairy industry could not ignore that low milk price levels and rising overhead costs at farm level were not a sound basis for a sustainable development of the sector.

 

“The increase of 9% reported in the NFS for 2019 actually represents a whopping 25% drop compared to 2017.  The improvement in 2019 relative to the severe drought year that was 2018 was the result of lower spend on fodder and feed, combined with higher milk volumes produced. Milk prices actually fell by 2.8% in 2019 according to the NFS, to levels equivalent to those received by farmers as long ago as 1995 as reported by CSO,” Mr Phelan said.

 

“Even more worrying for me is the emergence of a long-term trend of higher overhead costs developing on dairy farms.  Direct costs will naturally reflect rising cow numbers in expanding herds.  However, overhead costs should not.  Yet, in the five-year period to 2019, the NFS reveals those have increased by 21.5%, which clearly erodes farmers’ profitability and is unsustainable,” he said.

 

“If farmers are expected to play their full part in environmental and climate sustainability, they must first and foremost be economically sustainable.  I therefore urge Teagasc and co-ops to work together to support farmers in addressing this situation,” he concluded.