Rural economy faces €4bn deficit as a result of milk price reduction
Dairy farmers have stopped investing in sheds, milking equipment, and farm machinery
Dairy farmers have put a handbrake on buying and investing as the fall in milk price this year will wipe €2bn from their revenues, reducing spending in rural communities.
Almost half a billion has been wiped off dairy farm incomes in Cork alone, while Tipperary will lose almost a quarter of a billion in direct revenues, new figures from ICMSA show, with farmers pulling back from spending beyond the basics.
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 knock-on impact, according to ICMSA, is farmer spending has now fallen dramatically as a result.
“From concrete to shed suppliers, to milking equipment to farm machinery, the reports coming back is that dairy farmers have stopped buying and investing,” said ICMSA President Pat McCormack.
“Only the very basics are being purchased and this is going to have a dramatic impact on the local economy.”
The figures looked at the 26 counties to establish the reduction in revenues earned by dairy farmers over the last two years. 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 2pc year-on-year given the weather and price conditions at present.
This means almost 38 percent 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 dairy farm incomes will be severely hit in 2023, he said. “While fertilizer has reduced somewhat, most fertilizer was purchased early in the year or last year at inflated prices and, unfortunately, electricity and feed remain stubbornly high.”
