Irish dairy farmers are expanding production but continue to face unpredictable incomes, raising concerns about milk pricing, processor concentration and transparency across the dairy supply chain.
Rising Milk Production Highlights Persistent Challenges in Farm-Gate Pricing
Ireland’s dairy industry has experienced significant growth since the European Union abolished milk quotas in 2015. However, increased production has not necessarily translated into stable or predictable incomes for dairy farmers. Concentration among major milk processors, fluctuating global commodity prices and rising production costs continue to expose producers to substantial financial risks.
According to figures cited from Ireland’s Central Statistics Office (CSO), dairy cow numbers increased by approximately 42% between 2013 and 2023. Teagasc’s National Farm Survey also indicates that average dairy herd sizes expanded considerably over the following decade. Although this growth strengthened Ireland’s milk supply and export capacity, periodic declines in farm-gate prices have placed considerable pressure on farm profitability.
Processor Pricing Decisions Affect Farmer Confidence
Milk prices fell sharply during the 2015–2016 downturn, with base prices from major processors dropping into the low-to-mid 20-cent-per-litre range. Subsequent reductions in 2019 and 2021 also generated criticism from farming organisations, including the Irish Farmers’ Association (IFA) and the Irish Creamery Milk Suppliers Association (ICMSA).
These developments highlighted concerns about how processors communicate price changes and how closely farm-gate payments reflect market returns. Dairy farmers must continue purchasing feed, fertiliser, energy and other essential inputs, even when milk prices decline. Consequently, sudden price reductions can significantly weaken margins, particularly for farms that have invested heavily in expanding production.
The long-running dispute involving Kerry Group and Kerry Co-op further demonstrated the complexity of milk pricing arrangements. Farmers challenged whether the processor had consistently fulfilled its commitment to offer a leading milk price between 2015 and 2020. Arbitration supported Kerry Co-op’s position, and negotiations subsequently resulted in a €50 million settlement fund, paid out in 2025 as part of a wider restructuring.
The dispute intensified calls for clearer contractual commitments and greater accountability in determining supplier payments.
Income Fluctuations Undermine Dairy Farm Stability
Teagasc figures illustrate the scale of income volatility affecting Irish dairy producers. Average dairy family farm income fell from €157,591 in 2022 to €51,122 in 2023, before recovering to €108,536 in 2024 and approximately €153,300 in 2025.
However, the outlook remains uncertain. The figures cited in the analysis project a 42% decline in average dairy farm income in 2026, potentially reducing it to approximately €80,000 as milk prices weaken and production costs remain elevated.
These fluctuations complicate decisions about borrowing, farm expansion, labour, equipment purchases and long-term investment. Larger herds may improve production efficiency, but they can also increase exposure to debt repayments and higher operating expenses when market conditions deteriorate.
Beef Processing Concentration Reflects Wider Supply-Chain Concerns
Similar concerns affect Ireland’s beef industry, where major processors, including ABP, Kepak and Dawn Meats, account for a substantial proportion of cattle processing. The Irish Farmers Journal’s factory price comparisons have identified significant differences in payments between plants for comparable cattle.
Although beef and dairy operate under different purchasing arrangements, both sectors demonstrate the importance of competition and transparent pricing. Dairy farmers supplying milk to a limited number of processors may face comparable difficulties when seeking alternative buyers, particularly because raw milk is perishable and must be collected regularly.
Greater Transparency Could Strengthen Dairy Sustainability
Improving the resilience of Ireland’s dairy industry will require stronger transparency around milk-price calculations, bonuses, deductions and contractual obligations. Clearer reporting on processor returns and the relationship between market prices and farm-gate payments could help suppliers assess whether their milk is receiving competitive compensation.
Stronger producer organisations and effective fair-dealing rules could also improve farmers’ negotiating positions. At the same time, processors must remain competitive in international markets while maintaining reliable relationships with milk suppliers.
Ireland’s dairy expansion has strengthened its position in global dairy trade, but long-term sustainability depends on more than production growth. Farmers need predictable commercial arrangements and sufficient returns to cover costs, invest in their businesses and maintain viable family farms. Without meaningful improvements in pricing transparency and producer bargaining power, income volatility will remain a major challenge for the Irish dairy industry.
