Farmers are being advised to ensure their cost production is as low as possible as milk prices continue to fall.
But what should your cost of production be? We put it to a number of farmers and experts and they’ve come up with figures varying from 25c/L to 38c/L. What are your production costs?
30c/L – John Fitzgerald (Irish Farm Managers Association)Â
“For most guys I would say 25-26c/L would be the average. That’s before own labour, land costs and capital repayments are included.
“The most efficient guys who are growing 12-13t of grass their costs of production would be lower at 20-21c/l. However, I would say less than 15% of the farmers in the country are in this bracket.
“But for the average guy if they want a return for themselves and a living wage – 30c/L at least would be the cost of production.
“And that would not include capital repayments.”
“Every farmer is different when it comes to production costs
“I look at the business on its own and go from there. I would say the average production cost is about 28-30c/L at the moment.
“Last year our discussion group averaged 26c/L but many would have said that more costs should have been included. It difficult to get a handle on the full average cost of production across the country.
“It really depends on your own situation. A single guy operating on his own would have completely different drawings to a guy who has a family.
25-26c/L – Tom O’Dwyer (Teagasc Dairy Programme Manager)Â
“Our National Farm Survey found the average costs of production excluding own labour, land costs and capital repayments in 2014 was 26c/L.
“At an average milk price last year of 38-39c/L, that left a 12-13c/L margin for your average dairy farmer.
“This year we anticipate costs will be back slightly, however the superlevy will be an additional cost on many farms.
“This year I would anticipate that production costs will be on average 25-26c/L again.
“The reason Teagasc doesn’t include own labour, land costs and capital repayments in calculating production costs is because these figures vary so much between farms.
“We could include drawings of 6c/L in the figures. But would that be appropriate.”
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