COVID-19: Dairy farm incomes could fall by over €35,000


Before COVID-19, the average family farm income from dairy farming was expected to be €76,750 in 2020.

COVID-19: Dairy farm incomes could fall by over €35,000

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Before COVID-19, the average family farm income from dairy farming was expected to be €76,750 in 2020.

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).

2018

2019

2020 (Pre COVID)

2020 (COVID)




Scenario 1

Scenario 2

Scenario 3

Average FFI

€61,446

€70,200

€76,750

€60,985

€49,346

€39,505

Milk price

Relative to 2019

-10%

-15%

-20%

Milk production

+2%

+1%

-3%

Fuel and electricity price

-25%

-25%

-25%

Relative to 2020 (Pre COVID)

Average FFI

-21%

-36%

-49%

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