Saturday 1 October 2016

'A farmer could farm less and earn more'

Published 18/11/2015 | 02:30

Using information from the 2014 Teagasc NFS, the potential incomes for farming and leasing for an average cattle finishing farm are compared. We assume the farm is 40 hectares (99 acres), which is the size of the average cattle finishing farm in the NFS.

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We assume the farm has good land and so commands a lease price of €350/ha per year. We use the average family farm income for a cattle finisher in 2014 to determine the farmer's income.

According to the NFS, this amount is €332 per hectare, inclusive of direct payments. Based on the 40 hectare farm size, the farmer's farm income is calculated to be €13,280. We also assume that the farmer is married and under the age of 65 for taxation purposes. After tax, the farmer has a yearly income of €12,524 from farming.

Alternatively, the farmer decides to sign a seven-year lease, leasing out his land and his entitlements to a neighbouring farmer for the seven-year period. The farmer signs a private contract clause which ensures that the entitlements revert to him after the lease is finished. The lease price is €350/ha per year and the entitlements are leased at full value at €333 per entitlement. This results in a pre-tax lease income of €27,321 per year. After tax is taken into account, the farmer's net yearly income from leasing is €25,171.

In conclusion, using average figures for an Irish cattle finishing farm, one could earn €25,171 from leasing compared with €12,524 from farming.

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