The issue of income volatility on Irish dairy farms is addressed in a new report which evaluates the effectiveness of existing and proposed risk management tools, according to Teagasc.
The document by economists from Teagasc, Cork Institute of Technology and University College Cork concludes that dairy farmers in Ireland may require multiple risk management tools to address income volatility.
The new report is entitled ‘An evaluation of suitable tools to manage price/income volatility at dairy farm level in Ireland’, and was funded by Dairy Research Ireland.
It assesses the different forms of risk faced by Irish dairy farmers, including: output and input price; production; weather; and animal disease risks.
The research highlights the large increase in the volatility of milk and input prices over the last decade, the consequences for farm income volatility and the limited range of tools available to manage the associated risks, according to Teagasc.
Tools
The report contains an assessment of currently-available risk management tools, including forward contracting agreements and the taxation-based income averaging system, as well as a number of other possible risk management tools.
