Commenting on the Teagasc 2016 Outlook presentation this week, IFA National Dairy Chairman Sean O’Leary said the 2016 dairy income predictions were for an almost unchanged position when compared with 2015, which itself saw a 50% fall in dairy margins.
Mr O’Leary warned that the 2016 forecast of a 1.5c/l milk price increase, stable production costs, and small 1.7c/l increase in margin depended on the timing of the global dairy recovery relative to our seasonal peak, and ignored the very real challenge to farmers’ cash flow of lower constituents and volumes in the early part of the year.
“At this week’s presentation of their 2016 Outlook, Teagasc themselves recognised that their predictions for next year depend on a recovery of global markets impacting Irish milk prices before the end of our seasonal peak – and while this is certainly possible, it is not guaranteed,” Mr O’Leary said.
“What is certain is that, even if milk prices were to be held for the next few months, farmers will take a major hit because of lower volumes, and most of all lower constituents,” he said.
“This has to give all co-op board members food for thought in their price decisions to year end. Holding milk prices may not prevent a cash flow hit, but adjusting them further will definitely make matters considerably worse,” he concluded.