The number of dairy farmers in the State could fall to a low of 14,500 by 2014 compared to over 22,000 at the moment, it was predicted yesterday by a team of agricultural experts.
Studies by the Food and Agriculture Policy Research Institute (FAPRI) on what is likely to happen in the industry should current policies remain in place, found that approximately 6,500 dairy farmers will retire over the next 10 years.
The team said that apart from retirement and non-succession, structural change was expected to be high in the medium term as relatively high-profit levels this year and over the next two years decelerated exit rates.
"In the absence of any policy change, exit rates are expected to increase again post 2010 in response to market conditions," the report, which was launched yesterday, stated.
"It is projected that by 2014, when the milk quota system is due to end, dairy farm numbers will have declined to approximately 14,500, compared to 22,300 at present," said Dr Thia Hennessy, of the Teagasc Rural Economy Research Centre.
She said average farm family income across all creamery milk suppliers would increase from €30,000 last year to €47,000 by 2014.
The team also looked at what might happen should the amount of milk farmers are allowed produce increases by 3 per cent next year, or have a 3 per cent increase each year until 2014.
Teagasc economist Trevor Donnellan said that if a large quota increase was agreed as part of the upcoming Cap health check, few other EU states would have the potential to increase production significantly.
He added that if milk quotas were increased considerably, it would allow Ireland to increase its milk production by 20 per cent by 2015, when the milk quota is expected to be abolished.
Dr Hennessy said the worst thing which could happen to dairy farmers would be a small 3 per cent increase which would not offset the decline in milk prices paid to dairy farmers and would leave them worse off.
Looking at other sectors, Dr Kevin Hanrahan of Teagasc said strong international growth and the emergence of biofuels would lead to improved economic prospects for the agriculture and food sectors over the next 10 years.
He predicted an overall Irish agricultural sector income growth of 4 per cent over the next 10 years.