Business Farming

Friday 29 August 2014

Dairy farms worst hit as incomes are cut by 12pc

Darragh McCullough

Published 12/12/2012 | 06:00

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Farm incomes are down by 12pc this year, but dairy farmers have been worst hit.

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Despite farm output setting new records at almost €6.9bn, milk men saw their incomes slashed by 27pc on average, with those in the south and southeast suffering even bigger hits, according to new figures from Teagasc.

It leaves the family farm income on specialist dairy farms at close to €50,000 this year, but there are better prospects in 2013, when 5pc higher forecasted milk prices will add 20pc back to the bottom line.

Cereal farmers fared little better, with incomes back 19pc and only a 4pc improvement projected for 2013.

Sheep incomes dropped by 10pc, and no improvement is expected in 2013.

Pig margins improved 10pc in 2012 but the viability of many units remains precarious ,according to Teagasc.

In contrast, beef farmers had a much better year compared to 2011, with incomes up by 10-13pc on the back of a 16pc bounce in cattle prices.

And healthier returns in the cattle sector are predicted to continue into 2013 with steady cattle price forecasts and only a marginal drop in profit.

The improved performance of the beef sector helped cushion the impact of the bad summer which pushed up feed costs by 15pc, according to the CSO.

These official statistics come in the wake of dire warnings from the farm organisations of a total collapse in farm incomes due to one of the wettest summers on record.

However, Teagasc analysis shows that the worst of the poor weather was ringfenced to the south and south east.

The 12pc drop is almost half that predicted in recent weeks by the IFA.

INCOMPLETE

The farm organisation claimed that the difference in estimates was due to incomplete feed costings and animal movement figures.

However, industry sources believe that the final feed figures will not be hugely different from those being used by the CSO or Teagasc.

The results mean that farm incomes in 2012 are likely to be 20pc higher than 2010, when dairy incomes in particular suffered from low milk prices.

The Teagasc FAPRI unit analysis also highlighted the impact of last week's Budgetary cuts to the Disadvantaged Area Scheme and Suckler Cow Welfare Scheme. It estimates that suckler farmers' subsidy income per acre will be halved in 2013 as a result.

The €227m increase in farm sales to €6.9bn was mainly due to strong price increases in the livestock and tillage sectors.

Apart from higher feed costs, energy and oil inputs were the other inputs that saw a significant spike of 10pc. This was mostly due to a weaker euro, according to Teagasc's Trevor Donnellan.

The CSO put overall input costs in 2012 up by €335m to €5.2bn, some 7pc higher than last year.

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