Local dairy farm families are facing a 50% cut in their incomes next year, according to the latest economic forecasts from Teagasc.
The forecasts indicate that the average dairy farm income could fall to just €30,000 in 2015, down from €60,000 this year.
Dairy incomes are traditionally the highest incomes by far in the agriculture sector. A sharp reduction in wholesale milk prices due to a global oversupply of milk is the reason for the expected collapse.
Economists at Teagasc believe that next year will match the previous record worst year for the dairy sector, which was in 2009.
Teagasc economist Trevor Donnellan said that average Irish milk prices in 2015 were expected to fall to 27 cent per litre, a reduction of over 10 cent per litre on the average for 2014.
“This,” he added, “follows several years of very good incomes on dairy farms.
“This is likely to have a very significant impact on dairy farm incomes in 2015, with a reduction in excess of 50 per cent possible on some farms”.
According to Teagasc, globally 2014 has been an excellent year for grass based dairy producers, because of favourable weather conditions. Grain intensive dairy farming also benefitted from lower feed prices this year.
“When high milk prices are factored in along with the lower cost base, this has created a very profitable environment for milk production,” Mr Donnellan continued. “The result has been a strong increase in milk production globally.
“The stronger than anticipated increase in production in 2014 has seen the emergence of a surplus in dairy products on the international market.”
Meanwhile, IFA President Eddie Downey warned against excessive talking down of the milk price despite current market turbulence.
“We are facing into a challenging time for our dairy farmers, but we have also to recognise that we have an excellent quality product and strong links to various markets,” he added. “Urgent Government and EU action is required but banks, co-ops and Teagasc will also have to play a much stronger role in assisting farmers to deal with the reality of milk price volatility”.