The Teagasc National Farm Survey for 2016 due to be published later today provides a snapshot of the income earned by over 85,000 farm families.
It is understood the survey will show the average dairy farm income stood at about €51,000 – compared with just over €62,000 in 2015.
The Teagasc National Farm Survey results show that considerable efficiency gains continue to be achieved on dairy farms in 2016. Analysis of farms over the period since quota removal, shows that 4 out of every 5 dairy farms have increased production;
“Increases in milk volume and production efficiency further reduced production costs in 2016, but lower milk price meant that dairy farmers were unable to maintain their incomes”, said Teagasc Economist Trevor Donnellan.
Direct payments to farmers rose by up to 11pc last year, with new payments coming on stream such as the environmental scheme GLAS. Now the average direct payment stands at around €18,000.
However, the dependence of farmers on off farm work is still evident with one third working off-farm. Over half of all farms have an off-farm income.
A preliminary estimate of the Teagasc National Farm Survey results show that family farm income decreased by 9% in 2016, bringing the average income figure for the farming sector to €24,060. This is the return for the farmers’ labour and for the land and capital employed in the business.
Speaking at the launch of the results in Dublin, today, Dr. Emma Dillon, Economist with the Teagasc National Farm Survey said; “despite increased direct payments and a reduction in some of the key input items such as fertiliser, further falls in milk prices and poorer crop yields than in recent years, resulted in a 9 percent decline in average farm income in 2016”.
The continued roll-out of GLAS and the Beef Data Genomics Programme (BDGP) saw direct payments on cattle farms increase by between 5 and 11% in 2016 relative to the previous year.
This increase helped offset lower cattle prices and it meant that the average farm income on cattle farms increased by between 2% and 4% in 2016 depending on the production system.
Despite this increase, average cattle farm incomes remain quite low, at just €12,908 for cattle rearing farms in 2016;
“Cattle farmers are still very reliant on direct payments which comprise a large proportion of their income,” said Brian Moran of the Teagasc National Farm Survey; “The BDGP and GLAS schemes are of particular importance on cattle and sheep farms” he added.
Tillage farms were severely affected by a decline in crop yields in 2016. Coupled with a reduction in the price of cereals, this resulted in a 10% fall in average tillage farm income to €30,816. Lamb prices decreased by 2% in 2016 and with direct payments receipts relatively unchanged the average sheep farm income remained stable at €16,011.
Almost €690 million was invested by farmers in their businesses in 2016, of which over €245 million was invested on dairy farms. As in previous years two-thirds of farms have no business related debt, with many choosing to fund new investment from working capital. On the remaining one-third of farms the average debt level is €63,764 or 1.8 times the income level.
Farming continues to remain highly reliant on direct payments. The average direct payment per farm was nearly €18,000 in 2016, comprising 75 percent of farm income on average and almost 100 percent of income on the average cattle and average sheep farm.
The farming population in Ireland includes a considerable number of part-time farms with almost one in three farmers working elsewhere off-farm. Just over half of all farm households have an off-farm income source from either the farm-holder or spouse.
In spite of the fall income in 2016, average farm income has become less volatile over the last five years. Looking ahead to 2017, prospects for dairy are very positive, with a dramatic recovery in incomes forecast. Average incomes on drystock farms should remain relatively stable.
Value of farmers own labour
Meanwhile, IFA National Dairy Committee Chairman Sean O’Leary welcomed the inclusion, for the first time, of an estimate of farmers’ own labour costs in the analysis of the Teagasc 2016 Profit Monitor.
Sean O’Leary said this move by Teagasc follows an 18 month campaign undertaken by IFA. He said, importantly, this will also be reflected in the National Farm Survey when it is published in the next month or two.
“It has been a major bugbear to farmers that their own labour has gone unaccounted for, and literally not valued, for so long, in the assessment of their costs and their margins. This Teagasc exercise makes a real attempt at assessing the average number of hours worked, and putting a value (€15/hour) on these hours,” he said.
“This is really important when it comes to strengthening farmers’ hand when they make the case for getting fair value for their produce,” he said.
“I believe, however, that the real value of this calculation will come into its own in the National Farm Survey. The Profit Monitor, while a valuable benchmarking exercise which helps farmers improve their own performances, is not representative of the average overall financial performance of Irish dairy farms – unlike the National Farm Survey,” he said.
“It is important that, we would continue to be able to compare our competitiveness on production costs using the long established international procedures and protocols. However, to present the buyers of our products, including retailers, the full picture of the economics of farming, it is crucial that we would have a credible assessment of the farmers’ own labour – which is what this new Teagasc exercise gives us,” O’Leary said.
Source: Independent
Link: http://www.independent.ie/business/farming/dairy/dairy-farm-incomes-slumped-by-10000-in-2016-35773820.html