Reductions in feed and fertiliser use on Irish dairy farms for 2014 will be the main change in input expenditure.

This is according to Teagasc economist Trevor Donnellan, who spoke at its Outlook 2014 conference in Dublin this morning.

“A significant fall in feed and fertiliser prices will reduce expenditure further. This is forecast to lead to a reduction in overall milk production costs of close to three cent per litre in 2014,” he outlined.

In addition, the Teagasc economics team predicts that as we enter 2014, supply and demand on international dairy markets will remain out of balance.

“Limited product availability for international trade will keep dairy product prices elevated in the early part of 2014. However, assuming normal weather patterns prevail in major dairy exporting regions, there should be a restoration to growth in the volume of dairy products available for trade internationally by mid year in 2014. In turn this should put downward pressure on international dairy product prices.”

The uncertainty in terms of how the correction in dairy commodity prices in 2014 will impact on milk prices in Ireland was also noted by the Teagasc team.

“Given the seasonal pattern of production, the timing of market developments could have a significant impact on average milk prices for 2014. Keeping this caveat in mind, a decrease in Irish milk prices of 10 per cent is forecast for 2014,” they say.

Overall, Teagasc forecasts that dairy margins will decrease by three per cent in 2014 relative to 2013.

Also noted that when the mix of enterprises on the average dairy farm is considered, average family farm income for 2014 is forecast to increase by six per cent to a level of €60,000, with the increase mainly attributable to increased income from the beef enterprise on the dairy farm.

More than 200 people are attending today’s Teagasc Outlook 2014 conference in Dublin.