IFA National Dairy Committee Chairman Kevin Kiersey said preliminary results from the 2011 Teagasc Profit Monitor revealed that production costs for the average participant – who would be generally more focused on cost efficiency than the average dairy farmer – had increased by 11% in the last two years.
He said this showed that, while milk prices and margins had improved significantly, the latter had been partially eroded by rising fertiliser, energy and feed costs. <span> Total fixed and variable costs for those efficient dairy farmers had increased by 11% over the two year period, and by nearly 7% in the last 12 months alone.</span>
Kevin Kiersey said, “The Teagasc Profit Monitor results for the last two years confirm some of the points made in the Rabobank Global Dairy Outlook report titled “Show me the money!” published recently. The report states that rising production costs will mean that the price of extra exportable milk will remain high. The report also states that, in recent years, dairy farmers have not improved their profitability quite as much as one might think: margins have been eroded by rising input costs, and have become very volatile, requiring significantly improved skills from farmers to manage their business.”
“It is vital that, in the context of preparing for the post-2015 expansion, co-ops would bear these considerations in mind. In the face of rising costs, even the most efficient farmers will need to receive the best possible milk price to fund the on-farm investment necessary to deliver the extra milk the Irish dairy industry is planning for,” he concluded.