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Pat McCormack
Ex-president, ICMSA

A disaster for rural economy

The milk price reductions so far in 2023 will wipe €2bn from dairy farmers revenues in 2023 and in turn has reduced spending in rural communities by possibly double that amount and this is going to have a very serious impact not only on the dairy farmers themselves but on the wider rural economy in 2023 and well into 2024.

This year has seen very severe cuts to milk price throughout the course of the year and it comes as no surprise to see the spending power of dairy farmers dramatically deteriorate and this is being reported by businesses across rural communities that provide goods and services to dairy farmers and the wider dairy industry. From concrete to shed suppliers, to milking equipment to farm machinery, the reports coming back is that dairy farmers have stopped buying and investing, only the very basics are being purchased and this is going to have a dramatic impact on the local economy.  
We at the ICMSA have carried out a detailed analysis of each of the 26 counties to establish the reduction in revenues earned by dairy farmers over the last two years. Results show the dramatic drops in milk values with almost €2bn less expected to be paid to dairy farmers in 2023 versus 2022. This is an astounding amount to lose from the rural economy as we all know that farmers spend in their local communities and many local services and companies are dependent on farmers. With an output multiplier of two for dairy, the total deficit from the Irish rural economy could be €4 billion for 2023. The analysis used an average milk price of 59c/L for 2022 and an expected average price of 37c/L for 2023 with production expected to fall by 2 per cent year on year given the weather and price conditions prevailing at present. This means that almost 38 per cent of dairy revenues have been wiped away in the space of 12 months and this analysis does not include the very severe cost elements facing dairy farmers, meaning that dairy farm incomes will be severely hit in 2023. While fertiliser has reduced somewhat, most fertiliser was purchased early in the year or last year at inflated prices and unfortunately electricity and feed remain stubbornly high. 
At county level, we see the largest reduction occurring in Cork with almost half a billion of a reduction while Tipperary could lose almost quarter of a billion in direct revenues. These counties have large processors and this is where the multiplier effect can bite even harder with so many indirect jobs depending on the dairy sector.  The milk price reductions have been very severe and will have a massive impact on dairy farmer income in 2023 and ICMSA is calling on Minister McConalogue to immediately convene a meeting of the Dairy Forum so that a clear strategy can be put in place to kickstart an immediate recovery in milk price which is needed by the farmers who produce the milk on a daily basis but also the wider rural businesses that are dependent on it for their revenues.