With these recent reports, published by Teagasc in their mid year outlook report for 2017, we investigate to see whether this could in fact be true. Is dairy really in the midst of a boom?
The Outlook Report:
The report was published yesterday, as a mid year commentary on the economic performances of the various different Irish Ag sectors for 2017. The results were surprising to say the least, with a strong growth in dairy incomes forecast, and incomes estimated to rise to between €75,000 and €80,000 per year. This represents a huge increase from last years average income of €52,000 as part of the National Farm survey. The report also predicts that dairy cow numbers will rise by 3%.
Growth is also expected in Tillage and beef sectors, but nowhere near the level expected for dairy. The report predicted that with milk prices finally on the rise, higher milk production levels,could help farm incomes to double by the end of 2017.
The report also suggests that milk prices could increase by up to 7% in 2017. A record year was recorded so far this year in dairy, But could these predicted rises after a tumultuous few years for dairy farmers actually happen?Or was it bound to happen given the lower prices paid to milk suppliers in the country the past five years?
It was also predicted in the report that the cost of production has entered what it calls a benign period, meaning prices are not rising for products such as feed and fertilisers. Apart from fuel, the reports suggests that there is no sign of inflated production costs in the ag sector in Ireland. Another reason given was the rebounding of milk prices within the last year, even though prices recently climbed back up to 33 cents per litre, after hitting their lowest levels since 2009.
The opposing argument:
James Healy, President of Macra, spoke to John Connell (editor of ThatsFarming) where he discussed problems facing the industry. Healy suggested that in order for the future of dairy to have any chance of being successful, that an estimated 6,000 young farmers will be needed to enter the industry.
"It's (labour shortages) a huge problem and one that's been highlighted recently by Padraig Kelly in Teagasc. We're going to need 6,000 young people in particular to enter dairy farming in the coming years to supply a workforce needed to meet FoodWise 2020 targets", Healy said.
He continued by highlighting the negative publicity the industry receives, with lower prices reported etc, and says this is part of the reason youth steer clear from agriculture. He also added that parents don't want their kids to go into farming, as they want them to live a better life than they have.
"Parents tend to say don't go into farming, get a better job. It's hard work and a hard life", he added.
He said this leaves youth not seeing 'farming as a viable career path'.
From extensive research it is also pretty unclear as to where these figures appeared from. Last year, as mentioned above, the average income for dairy farmers was set at €52,000, it is unclear where the extra €23,000 derives from. It is also pretty unclear, if these incomes and increased productions do come about, where the labourers needed to fulfill these production numbers will come from. Where will we find the 6,000 needed to ensure the future of dairy?
It is also baffling as to how these figures can be reported when milk prices were the worst they have been since 2009. Prices are still only at 33 cents per litre,with many farmers still not best pleased and looking for further increases. According to the outlook report EU production of milk is only going to achieve a less than 1% increase this year. It also reports that Chinese imports of dairy remain on par to last year, and with Russia's ban still in place nothing suggests a vast improvement on the horizon.
The report also suggests that in the short term we will see a period of 'price stability' rather than further price increases. Again I wonder where the extra €23,000 will come from?
From looking at the facts and figures it is clear that the majority of the dairy markets have experienced slight increases as of late.
According to the Central Statistics Office (CSO) the domestic milk intake for the year so far is estimated at 905.4million litres in June 2017. This represents an increase of almost 6.19%, as mentioned in the outlook report also. Maybe there is method behind the madness?
Other figures on the CSO website show that milk sold for consumption by humans has also increased, by 44.8million litres. This suggests that there is good news in dairy, with butter also seeing increases of 15.4%. The production of dairy products by tonne, according to CSO, have also seen increases, barring cheese. Butter has risen from 20.3 to 26.8 in June 17, while SMP has also seen rises from 13.7 in 2016 to 18.4 this year. This points to an overall improvement in the dairy markets, Though there are also other key market indicators to suggest it won't be all plain sailing.
The report does states that higher levels of milk production will boost the growth of farm incomes by 100%.
From looking at the facts it does suggest there will be slight improvements in certain areas, but as a whole with prices not expected to increase,its hard to envisage such improvements as predicted.