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Next year will be a mixed year from a farm income perspective, depending on the enterprise, according to Teagasc’s recently launched Economic Outlook for 2020. Input prices are set to fall next year, so marginal increases are anticipated for livestock farm prices – however gross margins for cattle finishing enterprises are expected to fall by 2%.

Next year’s forecast was presented against a backdrop of Brexit and a world economy where economic growth is slowing down, due to the US/China trade war, and commodity prices easing across the board. Teagasc stressed that the outlook for 2020 as a whole is conditioned by the assumption that normal weather returns.

Feed prices are forecast to decline by about 5% in 2020. Fertiliser prices are forecast to decline by about 7% with no change in fertiliser volume assumed. Fuel prices are forecast to be unchanged in 2020 with a slight decline in crude oil prices cancelled out by carbon tax increases.

In 2020 average Irish milk prices are likely to remain similar to the 2019 average, according to Teagasc’s outlook. Feed and fertiliser prices are expected to fall so production costs should fall in 2020.

It is assumed that further milk expansion in 2020 will take place on 1% more land area than in 2019, while average, milk production per hectare will increase by 4%.In 2020 profitability per hectare, measured by net margin on the average dairy farm producing 4% more milk per hectare, will see an average net margin per hectare estimate of €1,514/ha in 2020 – up 12% on the €1,353 recorded for 2019 based on an unchanged milk price for 2020.

Cattle

Prices of finished cattle are forecast to increase by 4% in 2020. Weanlings and store prices are forecast to increase by 2% in 2020 but well below 2016 and 2017.

Gross margins on the cattle rearing and cattle finishing enterprises are forecast to increase by 1% and decrease by 2% respectively in 2020. In 2020, gross margins for single suckling enterprises are forecast to increase by 1% to €416/ha.

Net margins for the single suckling enterprise are forecast to improve slightly in 2020 but on average remain negative – a negative average net margin of €64 is forecast, the agricultural authority says.

Meanwhile, the forecast decrease in gross margin per hectare on cattle finishing farms of 2% is largely attributed to the positive impact of the exceptional aid package in 2019.Net margins on cattle finishing farms are expected  to decline in 2020 with an average negative net margin of €60/ha.

Sheep

In 2020, with lower input expenditure, increased output and a stable outlook for lamb prices, margins are forecast to increase from 2019.Sheep margins in 2020 will be boosted by the coupled sheep welfare payment.

The forecast 2020 gross margin per hectare for the mid-season lamb system is €636/ha – a 7% increase on 2019.

Costs of production are expected to be 2% lower in 2020; with increased output value forecast, net margin per hectare is expected to increase to €118/ha for the average sheep enterprise.

Cereals

EU winter planted area figures for the 2020 harvest are down on 2019, due to weather conditions. Irish cereal prices at harvest in 2020 will be highly dependent on growing conditions globally.

On the assumption that EU and global yields are normal, supply and stock levels in 2020 are forecast to decline slightly relative to the 2019 level so Irish cereal prices are forecast to increase slightly.

Overall costs on cereal farms look set to decline slightly. With a normal yield forecast and an increase in prices, margins for most crops in 2020 will increase. Overall, the net margin for cereals in 2020 is forecast to increase by about €75/ha.

Pigs

Pig prices are forecast to rise by 28% in 2020 to 215c/kg deadweight. With pig feed prices likely to be up marginally, margin over feed is forecast to improve to 103c/kg – up 56% on the 2019 level.

If Ireland can remain African swine fever free, in 2020 the sector is expected to experience one of its highest levels of profitability in 40 years, according to Teagasc.