A sustained increase in milk price is on the cards

Ulster Bank’s head of agriculture, Cormac McKervey commented: “International milk output has started to fall on a consistent basis.

“On the back of this development had come the expectation that milk markets would strengthen. And this has started to happen."

He added: “So the confirmation, prior to the Winter Fair, of local milk prices rising didn’t come as a total shock. But the timing of the announcements did come as a bit of a surprise.

“Up to the beginning of this week, the assumption had been that dairy processors would act in the New Year.

"However, the price increases that have been announced are to be welcomed. There is also an indication that the scope to further strengthen farm gate returns will exist as we get into 2024.”

According to the Ulster Bank representative, the economic fundamentals of milk production in Northern Ireland remain very strong.

Cormac McKervey again: “And that was always the case, despite the consequence of falling prices, historically high input costs and the poor weather that impacted across the dairy industry in 2023.

“Yes, some farmers were moved on to interest repayments only, where outstanding loans are concerned. In other cases, overdrafts were increased to facilitate cash flow requirements.

“But in the vast majority of cases an acceptable way forward was identified. One of the very strong trends that became apparent during the last 12 months, that would not have been a factor during previous dairy sector downturns, was the exceptionally high levels of feed-related debt that built up on farms.”

While McKervey has no concerns regarding the economic challenges that can impact on the dairy sector, the same cannot be said about the growing scourge of bovine tuberculosis (BTB).

“This is a genuine threat,” he said. “The footprint of the disease continues to grow across Northern Ireland.

“Affected dairy farmers are losing large numbers of, otherwise productive, cows.

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“In the short term, this is having a direct impact on their ability to maintain milk output levels.

“But in the longer term these family businesses have no option but to carry significantly larger numbers of stock than would normally be the case.

“Finding the accommodation to meet the needs of these additional animals becomes an immediate challenge, as does the cost of feeding them for what could be a significant period of time.”

McKervey continued: “Having to keep more stock adds to the threat of bTB further spreading within a herd. There is also the need to consider the tremendous mental strain all of this is putting on members of farming families.”

Turning to other sectors, the Ulster Bank representative confirmed that free range egg and pig producers made sustainable profits throughout 2023.

“Recent reductions in international soya prices should act to further boost pig returns,” commented McKervey.

“The poor weather did have a significant impact on the 2023 growing season with cereal growers and potato producers feeling the brunt of these more than challenging conditions.”

Looking ahead, the Ulster Bank representative believes that changes made to the farm support payments available in Northern Ireland will help to put local agriculture on a more sustainable footing.

He further explained: “Sustainability and profitability are, more or less, synonymous terms. For example, moves to reduce age at slaughter will help to drive efficiency within the livestock sector.

“And the same principle holds when it comes to calving beef and dairy heifers at younger ages.”

Cormac McKervey concluded: “Improving the rate of genomic improvement within all the livestock sectors is critically important as agriculture in Northern Ireland looks to the future.

“And in this context, the dairy and beef sectors should follow the example set by their poultry and pig colleagues.”

Cormac McKervey also makes the point that any dairy farmer concerned about the impact of low milk price and/or bTB should contact their bank to discuss the assistance options available.