Agricultural outlook 2026 – a more challenging year in store
The outlook for agriculture is significantly more challenging this year due to uncertainty and higher input costs by war in the Middle East.
This was one of the messages delivered in the recently published SCSI/Teagasc Agricultural Land Market Review and Outlook 2026, which reported that elevated costs are likely to persist this year and into next year with farmers expected to adopt a more cautious approach towards land purchase.
Commenting at the launch of the publication, Teagasc economist, Dr. Jason Loughrey said that while agricultural performance last year was strong overall, particularly in the dairy and cattle sectors, 2026 will be significantly more challenging.
“Last year, cattle enterprises recorded exceptional performance, with finished cattle prices rising by 39% and weanling prices increasing by 70%. Dairy farm profitability also improved, supported by higher milk prices – up 3% – and increased production – up almost 5% – with only modest increases in production costs. Sheep sector margins strengthened modestly, with higher lamb prices helping to offset rising input costs.”
“However, the outlook for Irish agriculture in 2026 is significantly more challenging, with unfavourable weather conditions, rising input costs, softer output prices and increased uncertainty expected to place pressure on farm profitability. Disruptions to energy markets arising from the US-Israeli war with Iran have contributed to increases in fuel, fertiliser, machinery hire and other input costs, with knock-on implications for farm profitability.”
The impact of higher prices
While the impact of higher prices will affect all parts of the economy, Dr. Loughry noted, the impact on agriculture will be particularly acute given the large share of the costs of production on Irish farms that are directly or indirectly tied to energy and fertiliser prices.
“While the outcome and duration of the war remain uncertain, it is likely that elevated fertiliser and energy prices will persist through 2026 and into 2027. These developments also highlight the extent to which Irish agriculture remains exposed to global supply chains and external economic shocks.”
“In addition, dairy margins are expected to decline substantially in 2026, as lower milk prices and higher fertiliser, fuel and feed costs reduce profitability relative to 2025. Overall, Irish dairy margins net margins could be in excess of 50% lower compared to last year as a result of lower prices and higher costs. Beef sector incomes are expected to moderate, although prices are forecast to remain above long term averages. Sheep producers face increasing cost pressures, with higher feed and fertiliser costs weighing on margins despite some recovery in lamb prices.”
Risk
A key feature of this year’s report is the inclusion of a special analysis on risk in Irish agriculture, with particular focus on dairy farming.
“Dairy farmers in Ireland are operating under increasing risk and uncertainty with commodity price movements and rising production costs leading to higher farm income volatility. Insights from Teagasc NFS data indicates that dairy farmers consider these market risks as being highly important in affecting their farm.
“At the same time, almost one-third of dairy farmers in Ireland consider personal risks as being most important with such risks including those related to farm succession, health and farm safety. In addition, approximately one-quarter of farmers consider institutional risks as most important including risks associated with policy changes and environmental obligations. Understanding how these risks translate into land market outcomes is essential for informed decision making, and this analysis provides valuable insight at a time of heightened uncertainty,” Dr. Loughrey concluded.
For further insights, read the Annual Agricultural Land Market Review and Outlook 2026 here.