Agricultural Economics
The Rural Economy Research Centre (RERC) is Teagasc’s Economics and Social Science Research Institute. Its mission is to produce high quality social science research and policy advice to improve the competitiveness and sustainability of Irish Agriculture and to enhance the quality of life in rural Ireland. Staff are very active in national and international research networks, participating in a number of EU Framework projects at present. The Centre has very close links with Universities in Ireland, with some staff teaching and supervising graduate students at these institutions. The work of the Centre is published in a variety of ways, e.g. papers at national and international conferences, national reports, papers in refereed scientific journals and via the Centre’s working paper series.
Recent Submissions
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The single farm payment and income risk in Irish farms 2005–2013Agricultural income volatility has become a major hurdle for Irish farmers and policymakers to overcome in their drive to increase investment, production and ultimately income in the sector. This paper studies data from 927 farms in the Teagasc National Farm Survey between 2005 and 2013, the first 9 years of the decoupled subsidy era. The primary income support for European farmers, the single farm payment (SFP), is analysed in the context of its relationship with market income risk, i.e. farm income excluding subsidies. Detrended measures of market income variability are regressed on a large set of control variables. The findings suggest that the amount of SFP received by farmers has a strong and statistically significant relationship with agricultural income volatility.
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Farm-level viability, sustainability and resilience: a focus on cooperative action and values-based supply chainsThis paper presents a critical discussion of the concepts of farm-level viability, sustainability and resilience, which are typically discussed separately in the literature. While farm-level viability frequently focuses on measurable economic factors, sustainability is comparatively more elusive because of its added social, cultural and ecological dimensions. Resilience, in turn, is unambiguous in the sense that it requires particular conditions, but is achieved in dynamic ways. A traditional resilience strategy in agriculture globally is co-operative action, involving farmers working together to enhance their viability and sustainability, often achieving resilience. We draw attention to agricultural development models that are distinctive because they leverage co-operative action in and between family farms in agricultural communities while pursuing integrated viability, sustainability and resilience strategies. We focus on the prospect of such rural development models, particularly a values-based supply chain approach, and identify crucial considerations and future research needs.
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Farm economic sustainability in the European Union: A pilot studyThe measurement of farm economic sustainability has received intermittent academic interest in recent times, while the conceptual discussions are often quite limited. Moreover, this concept receives more attention at periods of diffi culty for the sector. The measurement of farm viability is an important precondition to enrich these discussions. Therefore, it is necessary to develop more comprehensive and detailed measurement techniques to provide more clarity on viability and vulnerability levels in the sector. This paper refocuses attention on this issue, using a pilot dataset collected at farm level across a range of EU Member States which facilitates the assessment of an additional category of viability, namely that of economically sustainable farms, i.e. farms that are economically vulnerable but which are deemed sustainable by the presence of off-farm income. Differences in viability and economic sustainability across the eight surveyed Member States are shown. The analysis is sensitive to the factors included in the measurement of viability as well as to the threshold income used to defi ne viability. Although this is a pilot study, it enhances our understanding of the factors affecting cross-country evaluation of viability and sustainability, and the policy instruments that could improve viability levels.
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Measurement of sustainability in agriculture: a review of indicatorsIn recent decades, the concept of sustainability has become increasingly prominent in agricultural policy debates. This has led more and more stakeholders to pay attention to the questions of monitoring and evaluation of agricultural practices, and raised the question of appropriate indicators to assess sustainability aspects of given practices. We provide here a review of indicators of sustainability for agriculture. We describe sustainability indicators used in the literature following the typology based on the three sustainability pillars: environmental, economic and social. The literature review shows that the environmental pillar has undergone an ‘indicator explosion’, due to the multitude of themes covered and the attention given by society to this dimension of sustainability. By contrast, economic indicators target a relatively small number of themes. Social indicators typically cover two main themes: sustainability relating to the farming community and sustainability relating to society as a whole. The measurement of these social indicators is challenging as they are often qualitative and may therefore be considered subjective. Careful attention should be given to the choice of indicators, since the data measured will infl uence the calculation of that indicator and therefore the outcome of the analysis. It should fi rst be decided whether individual or composite indicators are preferable, and whether single indicators or a set of indicators should be used. Also, sustainability assessments should be validated, credible and reproducible. Several selection criteria are provided in the literature, such as representativeness, transferability, adaptability and measurability at an acceptable cost.
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Going beyond FADN: The use of additional data to gain insights into extension service use across European Union Member StatesThis paper examines the use of extension services by farm households across eight European Union (EU) Member States, exploring the type of extension service engaged with, the degree of engagement and the type of information sought. The impact of extension on economic, environmental and social sustainability is also considered. European data utilised are those collected from a pilot sample of 820 households in 2015/2016 as part of the EU Framework 7 project FLINT, from which the Irish results are incorporated further with Irish Farm Accountancy Data Network data. The results outline the key contrasts across the countries investigated and suggest that the degree to which households engage with extension services is primarily infl uenced by national policies. In addition, this analysis indicates that the extent of this engagement has implications for sustainability at the farm level. The fi nal conclusions and policy recommendations in this paper support the development of a large- scale version of the FLINT pilot survey.
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Defining national biogenic methane targets: Implications for national food production & climate neutrality objectivesMethane is a short-lived greenhouse gas (GHG) modelled distinctly from long-lived GHGs such as carbon dioxide and nitrous oxide to establish global emission budgets for climate stabilisation. The Paris Agreement requires a 24–47% reduction in global biogenic methane emissions by 2050. Separate treatment of methane in national climate policies will necessitate consideration of how global emission budgets compatible with climate stabilisation can be downscaled to national targets, but implications of different downscaling rules for national food production and climate neutrality objectives are poorly understood. This study addresses that knowledge gap by examining four methods to determine national methane quotas, and two methods of GHG aggregation (GWP100 and GWP*) across four countries with contrasting agriculture, forestry and other land use (AFOLU) sectors and socio-economic contexts (Brazil, France, India and Ireland). Implications for production of methane-intensive food (milk, meat, eggs and rice) in 2050 and national AFOLU climate neutrality targets are explored. It is assumed that methane quotas are always filled by food production where sufficient land is available. Global methane budgets for 1.5 °C scenarios are downscaled to national quotas based on: grand-parenting (equal percentage reductions across countries); equity (equal per capita emissions); ability (emission reductions proportionate to GDP); animal protein security (emissions proportionate to animal protein production in 2010). The choice of allocation method changes national methane quotas by a factor of between 1.7 (India) and 6.7 (Ireland). Despite projected reductions in emission-intensities, livestock production would need to decrease across all countries except India to comply with quotas under all but the most optimistic sustainable intensification scenarios. The extent of potential afforestation on land spared from livestock production is decisive in achieving climate neutrality. Brazil and Ireland could maintain some degree of milk and beef export whilst achieving territorial climate neutrality, but scenarios that comply with climate neutrality in India produce only circa 30% of national calorie and protein requirements via rice and livestock. The downscaling of global methane budgets into national policy targets in an equitable and internationally acceptable manner will require simultaneous consideration of the interconnected priorities of food security and (land banks available for) carbon offsetting.
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The spatial impact of rural economic change on river water qualityThis paper, using Ireland as a case study, examines the relationship between rural economic activities and river water quality. The stipulation from the EU water framework directive (WFD) that all surface waters in the EU must be of ‘good ecological status’ necessitates a quantitative understanding of the major determinants of water quality. Within this context, this paper combines a number of spatial datasets relating to agricultural, land use, residential and industrial activities, to examine the major economic influences on the ecological quality of water resources. It is hoped that providing a comprehensive understanding of the effect of a variety of economic activities that influence the ecological quality of water will be an important tool in the management of risk and will allow for more appropriate land use planning aimed at restoring and maintaining water quality as required by the WFD. Results indicate that the level of forestry, industrial activity, the intensity and type of agricultural activity and the type of wastewater treatment in an area are all critical factors affecting the quality of water resources. The model finds that relationship between agriculture and water quality improved over time during a period where there was substantial legislative measures and financial support to facilitate improved water quality.
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Addressing the challenge of wood mobilisation through a systemic innovation lens: The Irish forest sector innovation systemIn the face of growing demand for sustainable sources of biomass, the challenge of mobilising non-industrial private forest landowners (NIPF) with varying management objectives, to actively manage their forests and increase the supply of wood biomass, is an area of growing research and policy focus. While innovation and knowledge exchange is increasingly viewed as a means of promoting sustainable wood mobilisation, structural weaknesses in the sector such as deficiencies in the institutional and infrastructural setting or capacity of stakeholders, can negatively influence innovation processes. Addressing these overarching challenges requires a systemic analysis of the barriers to innovation across the forest sector as a whole. This case study of the Irish forest sector develops a comprehensive innovation systems framework, integrating structural and functional streams of innovation systems research. This `coupled structural–functional’ framework is applied to identify a number of interconnected systemic problems that hinder the functioning of the forest sector innovation system and negatively influence the potential for co-innovation and wood mobilisation in the sector. Three sets of key systemic wood mobilisation problems are identified, among which there is negative feedback. These so called `blocking mechanisms' have developed over time as a result of historical patterns of practice, prevailing culture, attitude and regulation and are defined here as (i) weak networks blocking capacity development of new forest owners, (ii) infrastructural problems blocking the reach and effectiveness of knowledge networks, (iii) rigid institutional structures and policy blocking co-innovation. To address these deficiencies in the current forest policy and institutional environment, this study makes a number of policy recommendations to promote co-innovation and tackle the multi-dimensional challenge of wood mobilisation.
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A discrete choice experiment exploring farmer preferences for insurance against extreme weather eventsAgriculture represents one of the most vulnerable sectors to extreme weather events that are projected to increase with climate change. Insurance has been advocated as a more efficient means to ensure financial security to farmers, than post-disaster aid for damages. A potential drawback of insurance however, is that unless carefully designed it could dis-incentivise farmers to engage in wider farm adaptation measures or lead to more risk-taking behaviour. This paper analyses the attractiveness of publicly-backed climate risk insurance offerings to farmers and explores their preferences for elements of insurance schemes that do not negatively affect incentives for wider farm adaptation. Specifically, a discrete choice experiment is used to reveal Irish farmers’ preferences for multi-annual insurance contracts and weather-indexed versus traditional indemnity insurance and cost. Results indicate that a majority of farmers are willing to buy publicly-backed insurance for protection from extreme weather events. Younger farmers, farmers who currently have farm insurance, farmers from certain geographical locations and farmers who have been previously affected by extreme weather events are more likely to buy insurance. With respect to the design of insurance schemes, farmers prefer multi-annual coverage versus annual renewal. They also prefer indexed-insurance and have a strong preference for cheaper coverage. Despite the important role that insurance could play in protecting farms financially from damage caused by extreme weather events, few studies have examined preference for weather-indexed insurance within a European context. New evidence on farmer preferences and intended behaviours is therefore critical to inform policy in this area.
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More than two decades of Agri-Environment schemes: Has the profile of participating farms changed?The agri-food sector is under increased pressure from consumers to improve on the sustainability of production processes. Policies that incentivise farmers to improve environmental performance, such as agri-environment schemes (AES), are increasingly important. Understanding the choice to participate in these programmes aids policymakers in designing schemes that meet participation and environmental goals. While a number of studies have investigated the decision using cross-sectional data on one or multiple locations, very few have used longitudinal data to investigate the impact of institutional changes over time. Using Ireland as a case study, this paper uses a nationally representative panel of data spanning 23 years to model the impact of scheme and policy changes on the type of farms participating in AES. This paper argues that environmental issues surrounding intensive farms (such as the loss of nutrients and sediment to water and greenhouse gas emissions) are not being optimally addressed in scheme design and further development of such programmes is needed to reduce negative environmental impacts.
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Exploring nitrogen indicators of farm performance among farm types across several European case studiesNitrogen (N) indicators are key for characterizing farm performance, because of the role of N in food production and environmental sustainability. A systematic monitoring of N balance at the farm level could contribute to understanding differences in N management and impacts among farms and among regions. The objective of this study was to increase the understanding of differences in N indicators at the farm level across Europe, and to derive possible target values. Farm-level data were collected through surveys of 1240 farms from Atlantic, Continental and Mediterranean Europe, that were diverse rather tahn country representative. The data were analysed according to a common procedure, using three related indicators: N use efficiency (NUE, farm-gate ratio of N outputs to N inputs), N surplus and N output in agricultural products. Specific target values were derived for farm type (arable, dairy, pig and mixed farms) based on the statistical analysis of the data set. The effect of not accounting for N losses involved in the production of purchased feed and the end use of exported manure (externalisation) on the animal farm indicators was evaluated by recalculating inputs with adjusting factors. The results show a wide variation in NUE and N surplus, mainly related to differences in farming systems and management. Arable farms presented lower mean N input and surplus than livestock farms, and therefore had the highest median NUE. The modest targets (i.e. median of data) for arable farms were NUE 61% and N surplus 68 kg N ha−1, for dairy farms NUE 30% and N surplus 155 kg N ha−1, and for pig farms NUE 40% and N surplus 135 kg N ha−1. Externalisation had a large effect on animal farm indicators. After adjusting for externalisation, the modest target NUE for dairy farms was 19% and for pig farms 23%. Farms outside their agro-environmental optimum could approach their specific targets by increasing or reducing N inputs (intensification or extensification) or adopting additional strategies (sustainable intensification). In conclusion, N indicators were useful to compare farm performance among different farming systems and to define a characteristic operating space for a farm population, but caution should be taken when comparing livestock farms before externalisation adjustment, and consideration should be given to changes in soil N stocks. Farm system-specific targets for N indicators and linkages with the Common Agricultural Policy may create the necessary incentives to optimise NUE and reduce N losses to air and water.
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Participation in agri-environmental schemes: A contingent valuation study of farmers in IrelandAgri-environment schemes (AES) are an important part of agricultural policy within Europe. They seek to achieve important goals with regards to biodiversity and the protection of natural resources while also helping to maintain culturally important landscapes and agricultural practices. Participation rates have been an important area of research into assessing the success of AES. Within Ireland and more broadly across Europe, systematic non-participation in AES has been observed. Certain farm and farmer types have been found more likely to participate. In this paper a contingent valuation exercise is conducted that assesses how AES payment levels impact on the participation decision of farmers. A bivariate probit with sample selection is utilised to account for farmers who are unwilling to participate regardless of payment levels. This allows for a more accurate estimation of farmer willingness-to-accept to participate in the hypothetical AES presented. It also offers insight into the characteristics of farmers who are unlikely to ever participate in these schemes. From the results it appears a significant proportion (30%) of farmers are unlikely to ever participate in AES, with the remaining open to participation depending on the compensation offered. It is argued that increased compensation levels may increase participation rates among some farmers who to date have been unlikely to participate.
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A Microsimulation Model for the Land Rental Market in Irish FarmingIn this paper, we utilize Teagasc National Farm survey data to analyse the agricultural land rental market in Ireland with a newly developed agent-based microsimulation (ABM) model and a classical walrasian equilibrium model of the land rental market. We conclude that the microsimulation model has a number of strengths in addressing the interactions between landowners and tenants and dealing with the impact of economic changes on the farm size concentration. The equilibrium model retains some value in dealing with the question of price determination and in illustrating the potential surpluses to be gained from a more active land rental market. The paper contains a comparison of simulation results from the ABM model with recent farm-level data and Census of Agriculture data. These comparisons indicate the relevance of some findings from the simulation model including the rise in average dairy farm size and the decline in area allocated to non-dairy cattle farming. However, the sheep farming system appears to have defied the predictions from the simulation model and this may be attributed to the recent improvement in economic performance for this sector. The ABM model can be further refined to account for decisions in relation to the choice of farming system, the question of retirement and farm exit.
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Teagasc note on carbon budgetsIn this note we set out our assessment of Irish agriculture sector emissions of GHG with and without measures (technical abatement measures in agriculture and agricultural land use measures) over the period to 2030 and compare these with 5 different possible agriculture sector carbon budgets outcomes.
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Policy Incentives and the Organic Value Chain in IrelandAdministrative datasets are utilised to study farms that have converted to organic beef production in Ireland, to draw lessons for future CAP scheme design. The analysis confirms anecdotal evidence in relation to a leakage of animals from the organic to the non-organic (conventional) beef sector. As a result of this differential response across the value chain, there is sub-optimal production of organic meat relative to the investment in incentives for conversion from non-organic to organic production. This may result in risks to the long term viability of the incentive scheme and more widely, for supports for organic farming.
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The potential impact of differential taxation and social protection measures on farm afforestation decisionsThe question of what motivates decisions to change land use or farm management practices has recently received much attention in the context of designing policies to incentivise change. This paper critically analyses aspects of the prevailing incentive policies for farm afforestation, with a view to identifying how different components of income influence the uptake of afforestation. Previous analyses have focused on the role of market income and subsidies in farm income. This paper additionally examines the impact of fiscal instruments on disposable income. The analysis finds that from a household welfare perspective, the inclusion of benefits and taxation in calculating relative life-cycle incomes from forestry and agriculture, provides additional information relevant to the farm afforestation decision. From the policy makers perspective, this analysis illustrates the re-distributive nature of the Irish tax/benefits system as benefits can be very significant at the bottom of the income distribution whereas taxation narrows the gap at the top of the distribution. The analysis shows that even if the level of disposable income is higher for agriculture on more intensive farms, the use of a disposable income measure in analysing the returns from farm afforestation, provides valuable insights in relation to how financial policy levers impact on different farm systems with different levels of farming intensity At the lower end of the distribution, the analysis shows that low-income farms could acually be worse-off as a result of planting. Further research is required to estimate “cut” points at which changes in taxation or benefit thresholds and increased level of uptake of benefits, could bring about a gain from the inclusion of forestry in overall farm income.
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Assessing stone walls habitat quality – Which factors affect bryophytes and macrolichens on farmland stone walls in Ireland?Stone walls are ubiquitous field boundaries used to restrict livestock movement or to separate property. Bryophytes and lichens are often the dominant vegetation in dry stone walls and are strongly affected by local microhabitat characteristics. Bryophytes and lichens related metrics can be used to define habitat quality of stone walls. The current study assessed how richness and cover of bryophytes and macrolichens in dry stone walls related to each other and how different environmental variables and farm management descriptors determined richness and cover of both groups in dry stone walls. Bryophytes and macrolichens were sampled in stone walls on sixteen farms across a management intensity gradient in Ireland. Bryophyte cover correlated positively and significantly with bryophyte richness and macrolichen cover and richness, and can thus be used to assess stone walls quality. Farm management intensity emerged as the variable most strongly related with species richness of bryophytes and cover of both groups. Altitude also emerged as a strong predictor of both groups’ richness and cover. This study provides a novel perspective on stone wall habitat quality and results indicate that by promoting extensive farming it is possible to increase stone walls quality.
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A discrete choice experiment exploring farmer preferences for insurance against extreme weather eventsAgriculture represents one of the most vulnerable sectors to extreme weather events that are projected to increase with climate change. Insurance has been advocated as a more efficient means to ensure financial security to farmers, than post-disaster aid for damages. A potential drawback of insurance however, is that unless carefully designed it could dis-incentivise farmers to engage in wider farm adaptation measures or lead to more risk-taking behaviour. This paper analyses the attractiveness of publicly-backed climate risk insurance offerings to farmers and explores their preferences for elements of insurance schemes that do not negatively affect incentives for wider farm adaptation. Specifically, a discrete choice experiment is used to reveal Irish farmers’ preferences for multi-annual insurance contracts and weather-indexed versus traditional indemnity insurance and cost. Results indicate that a majority of farmers are willing to buy publicly-backed insurance for protection from extreme weather events. Younger farmers, farmers who currently have farm insurance, farmers from certain geographical locations and farmers who have been previously affected by extreme weather events are more likely to buy insurance. With respect to the design of insurance schemes, farmers prefer multi-annual coverage versus annual renewal. They also prefer indexed-insurance and have a strong preference for cheaper coverage. Despite the important role that insurance could play in protecting farms financially from damage caused by extreme weather events, few studies have examined preference for weather-indexed insurance within a European context. New evidence on farmer preferences and intended behaviours is therefore critical to inform policy in this area.
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Microbial composition and omasal flows of bacterial, protozoal, and nonmicrobial amino acids in lactating dairy cows fed fresh perennial ryegrass (Lolium perenne L.) not supplemented or supplemented with rolled barleyThe objective of this study was to evaluate the effect of rolled barley supplementation on microbial composition and omasal flows of bacterial, protozoal, and nonmicrobial AA in cows fed fresh perennial ryegrass (Lolium perenne L.; PRG). Ten ruminally cannulated multiparous Holstein cows averaging (mean ± standard deviation) 49 ± 23 d in milk and 513 ± 36 kg of body weight were assigned to 1 of 2 treatments in a switchback design. The treatment diets were PRG only or PRG plus 3.5 kg of dry matter rolled barley (G+RB). The study consisted of three 29-d periods where each period consisted of 21 d of diet adaptation and 8 d of data and sample collection. A double-marker system was used to quantify nutrient flow entering the omasal canal along with 15N-ammonium sulfate to label and measure the microbial and nonmicrobial omasal flow of AA. Overall, rolled barley supplementation had no effect on the AA composition of the omasal liquid-associated and particle-associated bacteria. Rolled barley supplementation affected the AA concentrations of omasal protozoa; however, the differences were nutritionally minor. Particle-associated bacteria AA flow was increased for all AA, except for Trp and Pro, in cows fed the G+RB diet. Rolled barley supplementation had no effect on protozoal AA flow. On average, protozoa accounted for 23% of the microbial essential AA flow, which ranged from 17 to 28% for Trp and Lys, respectively. The flow of all AA in omasal true digesta increased in cows fed the G+RB diet compared with the PRG-only diet, resulting in a 228 g/d increase in total AA flow in cows fed the G+RB diet. This increase in total AA flow in cows fed the G+RB diet was due to an increase in microbial AA flow. Rolled barley supplementation had no effect on nonmicrobial AA flow. The nonmicrobial AA flow modestly contributed to total AA flow, accounting for 15.6% on average. These results indicated that extensive ruminal degradation of PRG AA occurred (83.5%), and we demonstrated that cows consuming PRG-based diets exhibit a large dependence on microbial AA to support metabolizable AA supply. Rolled barley supplementation can increase the omasal flow of microbial AA in cows consuming PRG-based diets. However, further research is required to elucidate if this increased AA supply can support higher milk yield under such dietary conditions.
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Exploring the relationship between mastitis risk perceptions and farmers’ readiness to engage in milk recordingThe need to move towards Selective Dry Cow Therapy (SDCT) has become increasingly pertinent as a means to reduce the use of antibiotics in the dairy sector. With the EU 2022 ban on prophylactic antibiotics at drying off, practices on some farms will need to drastically change. In Ireland, one particular challenge to the sector-wide transition to SDCT is the lack of widespread uptake of milk recording across dairy farms, a decision support tool which can support mastitis control and help identify cows to select for SDCT. The current study examined readiness to engage in milk recording amongst Irish dairy farmers, and specifically investigated the role of mastitis risk perceptions in shaping farmers’ readiness. The study explores the multifaceted nature of risk perception as a construct shaping farmers’ attitudes. An online survey was carried out with 197 Irish dairy farmers exploring their attitudes towards mastitis and milk recording. A cluster analysis classified farmers according to their mastitis risk perceptions, with 3 segments identified with differing risk perception profiles. Elevated mastitis risk perceptions were linked to an increased readiness to milk record. However, this relationship was not universal across all farmers. One segment of farmers in the current study maintain low mastitis risk perceptions and remain unmotivated to engage in milk recording. The study concludes that targeted risk communication strategies related to mastitis and milk recording are needed to encourage the move towards SDCT and reduced AMR. Results suggest that the types of risk communication strategies – message framing and two-way risk communication – should reflect farmers’ types of mastitis risk perceptions to have the most effective impact on milk recording uptake.