According to the report, incomes on cattle-rearing farms are expected to rise from a low level in 2022, and incomes on ‘cattle other’ farms (mainly finishers) are also expected to increase slightly due to higher finished cattle prices, but there remain significant challenges with the continuation of elevated feed prices and the seasonality of beef production. Sheep farm incomes are forecast to remain relatively unchanged on the 2022 level, according to the report.
Dairy drop
The substantial drop in dairy-farm income forecast would bring the average back to €70,000. For the second year in succession, no increase in aggregate Irish milk production is forecast. While dairy-cow numbers have increased marginally in 2023, this has been offset by slightly lower milk yields. Weather conditions have been unfavourable at times this year and this is evident in grass growth figures, which are below the long-term average. Average milk production costs in 2023 are likely to remain close to the 36c/L average figure recorded in 2022, leaving higher-cost producers, in particular, with very low margins.
Tillage
In the tillage system, unfavourable weather during parts of the growing season in 2023 has meant that Irish cereal yields will be down significantly for many crops compared to 2022, with the spring barley crop particularly affected, the report states. The weather woes have continued into harvest time, with persistent rain in many regions to date impacting progress on harvesting.
While 2023 EU production volumes of wheat and barley, in particular, are estimated to be well down on 2022 levels, the global production and ending stocks for maize continue to have an impact on global cereal prices. While there is some nervousness in the market at the moment following the latest closure of the Black Sea routes to Ukraine cereal exports, futures markets at present are still forecasting a significant downward movement in harvest prices in 2023 compared to 2022, with price decreases in the order of over 20 per cent likely.
While additional support was available this year via the Straw Incorporation Measure, Tillage Incentive Scheme and Organic Farming Scheme, this will not be enough to negate the significant decrease in forecast market based gross output for the average farm, according to the report.
There has been some respite in the form of reductions in fertiliser and fuel prices this year, however it is still expected that much of the cereals grown in 2023 will have total costs of production higher than in 2022. The average Tillage farm income is forecast to be over 50 per cent lower in 2023 than in 2022. This would bring the average income in the system down to around €37,000.
Other enterprises
Irish pig prices have risen substantially over the last 12 months as EU pig production has fallen. After 20 months of continuous losses, due to record high feed and energy prices, Irish pig producers have now returned to a profitable situation.
The average income on cattle-rearing farms is forecast to increase by 15 per cent in 2023. This would bring the average income up to about €10,800. This forecast increase is partly due to the introduction of both the Suckler Carbon Efficiency Programme (SCEP) and the Agri-Climate Rural Environment (ACRES) scheme. Mart prices are expected to be slightly higher in the autumn of 2023. However, elevated feed prices and overhead costs mean that the average net margin (profit exclusive of direct payments) on cattle-rearing farms could remain negative in 2023.
The average income for ‘cattle other’ farms in 2023 is forecast to increase by 5 per cent to about €19,800. This increase in income in 2023 can be attributed to higher finished cattle prices, as total production costs are likely to remain largely unchanged.
Sheep farms have experienced a 5 per cent fall in lamb prices so far in 2023 and, as with other farm enterprises, production costs on sheep farms remain at elevated levels. While EU sheep meat supply is down in 2023, consumption is expected to remain similar to the 2022 level, resulting in positive movement in average EU prices. The price attractiveness of the EU market is leading to increased imports, particularly from the UK. Irish prices are forecast to stabilise over the second half of the year and for the year as a whole are estimated to remain modestly positive. The average income on Sheep farms is forecast to increase marginally, by about 5 per cent in 2023.