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Using Efficiency to Drive Profitability in Uncertain Times
Unprecedented increases in farm input prices, mainly feed, fertiliser and energy, has created a lot of concern for farmers throughout Europe. Predictions that were made early in the year have now been further revised due to the conflict in the Ukraine and its financial and supply repercussions. While farmers are worried there is a lot of evidence to suggest that they should be optimistic on some aspects as well.
Milk price and beef prices increases
Dairy farms have seen milk price reach 50 cents per litre (c/l) base price with some farms receiving over 60c/l based on their solids. The milk price in 2022 will be up to 30% higher than 2021 and with milk production costs increasing by 30% compared to 2021 levels, the average dairy farm will see their net margin retain similar levels to 2021. This is according to the updated document from Teagasc on the situation and outlook for Irish agriculture produced in April.
Some farmers are receiving 60c/litre based on their milk solids
There is a very similar story for beef farmers with a 12% increase in price in 2021 being further supported with an additional 16% increase in 2022 for the price of finished cattle. This is being driven by strong retail demand for product as well as increased EU exports. While this is tempered somewhat by an 11% increase in overhead cost, the gross margin on beef finishing farms is predicted to be the same as 2021 levels.