In their recent report, entitled ‘COVID-19 Initial Economic Assessment of its Impact on Irish Agriculture’, Teagasc’s Agricultural Economics & Farm Surveys Department assessed the potential impact that the current pandemic could have on dairy farm incomes.
Impact
Similarly to the analysis of beef farm incomes, 3 scenarios were looked at, which are based mainly around lower milk prices levels.
However, the impact of a lower volume of milk being delivered to processors in 2020 than had been anticipated in advance of the pandemic has also been taken into account.
Pre COVID-19, the expectation for 2020’s milk price was 34c/L vat inclusive at average fat and protein levels. It was also expected that milk production would increase by 5% and that feed and fertiliser costs would be lower than in 2019.
The average family farm income (FFI) on dairy farms was expected to increase from an estimated €70,200 in 2019 to about €76,750 in 2020.
The 3 scenarios evaluated in this analysis are as follows:
COVID-19 Scenario 1:
- Milk price 30.6 c per litre vat inclusive at national average fat and protein (down 10% relative to 2019), equivalent to a base price of 28.0c per litre;
- Milk Volume (up 2% on 2019);
- Concentrates Volume (down 3% on 2019);
- Fuel/electricity price (down 25% on 2019).
COVID Scenario 2:
- Milk price 28.9 c per litre vat inclusive at national average fat and protein ( down 15% relative to 2019), equivalent to a base price of 26.4c per litre;
- Milk Volume (down 1% on 2019);
- Concentrates Volume (down 6% on 2019);
- Fuel/electricity price (down 25% on 2019).
COVID-19 Scenario 3:
- Milk price 27.2 c per litre vat inclusive at national average fat and protein (down 20% relative to 2019) equivalent to a base price of 24.9 c per litre;
- Milk Volume (down 3% on 2019);
- Concentrates Volume (down 9% on 2019);
- Fuel/electricity price (down 25% on 2019).
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|
2018 |
2019 |
2020 (Pre COVID) |
2020 (COVID) |
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|
|
Scenario 1 |
Scenario 2 |
Scenario 3 |
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|
Average FFI |
€61,446 |
€70,200 |
€76,750 |
€60,985 |
€49,346 |
€39,505 |
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Milk price |
Relative to 2019 |
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|
-10% |
-15% |
-20% |
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|
Milk production |
+2% |
+1% |
-3% |
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|
Fuel and electricity price |
-25% |
-25% |
-25% |
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|
|
Relative to 2020 (Pre COVID) |
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|
Average FFI |
-21% |
-36% |
-49% |
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