What outlook for 2018?
2017 will go down as a good year for Irish dairy farmers – albeit one which was badly needed to catch up with the 2-3 previous years which took their toll on cash flow and put farmers to the pin of their collars to meet financial commitments.
Assuming volumes end the year up 7-8%, and prices average 33% above last year, the overall output value of milk for the country will have increased by around 43%. Early indications from Teagasc suggest the average dairy farm income for 2017 before the remuneration of the farmer’s own labour could be around €90,000. Of course, this has to be put in the context of the two very difficult preceding years.
And now that the year is almost over, it is fair to ask – what will the dairy sector look like in 2018? Where will dairy and milk prices end up? Crucial in this is the recovering global milk production, the continuing strong positive trends on demand and of course the looming presence of a 380,000t stock of SMP, bought into intervention during the crisis period of 2015/16, and in 2017.
Production recovering globally
Stronger prices in all milk producing regions have resulted in a return to output growth within the EU, including France and Germany. In New Zealand after a wet spring reduced August and September supplies, the peak month of October saw a good recovery – but now moisture deficit again challenges pasture growth.
So in the EU, September milk production was up 3.7%, and this has continued into the following month. October milk production is well up in most of the main producing countries. France output increased 5.5%, Germany’s by 4.8%, with cull cow numbers in Germany down 13.3% for the month of October. In the UK, where cow slaughters were down 6.2% for the month and 3.8% for 2017 todate, production was up 4.2% in October. Belgian production was up a massive 8.23% for the same month, while the Danish milk output was up 5.3%.
In New Zealand, the wet spring depressed early season production, but September output was back up over 2%, and the October collections by Fonterra were up 2.3%. However, FCStone international now report the beginnings of a severe moisture deficit, affecting the South Island more than the North Island, and potentially challenging production over the coming weeks.
In the US, production continues to grow into October, albeit at a slightly slower 1.4%, with California continuing to lose ground to Wisconsin.