A steep decline in milk prices over the past year has dealt a severe blow to Irish dairy farmers, wiping out nearly 38% of their revenues, according to data compiled by the Irish Creamery Milk Suppliers Association (ICMSA). Association president Pat McCormack has characterized this development as a “disaster for the rural economy.” Dairygold, a major processor, recently cut its July quoted milk price by 2 cents per litre (c/pl) to 36 c/pl, attributing the reduction to weakening global milk markets and sustained demand pressure in key markets.
To provide context, in June of the previous year, Dairygold compensated its milk suppliers at 55.5 c/pl. This represents a substantial year-on-year decrease of just over 35%. This decline has a ripple effect, causing dairy farmers across Ireland to collectively experience a €2 billion reduction in revenues, with the county of Cork mainly affected.
In 2022, milk revenues in Cork reached €1,269,394,000. However, the ICMSA reports that the revenue figure 2023 now stands at €777,865,000, reflecting a staggering reduction of €491,529,000 or 38.7%. The ICMSA conducted an exhaustive county-level analysis to ascertain the decline in earnings for dairy farmers over the past two years, revealing substantial drops in milk values. These figures indicate that nearly €2 billion less is projected to be paid to dairy farmers in 2023 compared to the previous year.
Pat McCormack emphasized that this immense loss will have dire consequences for dairy farmers and the broader rural economy in 2023 and 2024. As farmers tighten their budgets and cut spending, local communities and services that rely on agricultural expenditure are also bracing for impact.
Businesses across rural communities providing goods and services to dairy farmers and the broader dairy industry have reported a significant decline in spending power. Industries spanning concrete and shed suppliers to milking equipment and farm machinery have seen reduced purchasing and investment, ultimately impacting the local economy.
With a dairy outlet multiplier of two, McCormack estimated the total loss to the Irish rural economy in 2023 could amount to as much as €4 billion. Counties like Cork and Tipperary, home to large processors, have experienced substantial reductions, underscoring the multiplier effect’s wider consequences for jobs dependent on the dairy sector.
The ICMSA’s analysis considered an average overall milk price of 59 cpl for 2023 and an anticipated average of 37 cpl for the same year. Given prevailing weather and pricing conditions, a 2% year-on-year decline in production was factored in. McCormack noted that this equates to nearly 38% of dairy revenues being erased within 12 months. He highlighted that the analysis does not even encompass the severe cost elements confronting dairy farmers, indicating that dairy farm incomes will face significant setbacks in 2023.
Despite some reductions in fertilizers, elevated prices from previous years and persistently high costs for electricity and feed compound the challenges. In light of these circumstances, McCormack called on the Minister for Agriculture, Food & Marine, Charlie McConalogue, to convene a Dairy Forum meeting to formulate a strategic plan for immediate recovery in milk prices. The urgent call to action stems from the understanding that this affects not only the farmers producing daily milk but also the broader rural businesses heavily reliant on it for revenue.
