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Independent.ie

Wednesday 18 October 2017

Dairy farm debt levels averaging €850 per cow

Despite a fall-off of 17pc in dairy income to €51,809, it still remained far ahead of earnings from suckler farms at €12,908 on average, with sheep farms at €16,011.
Despite a fall-off of 17pc in dairy income to €51,809, it still remained far ahead of earnings from suckler farms at €12,908 on average, with sheep farms at €16,011.
Teagasc Director, Professor Gerry Boyle
Louise Hogan

Louise Hogan

Dairy farmers who have taken out loans to invest in equipment and fund expansion in recent years are now running debt levels averaging €850 a cow.

The latest snapshot of farm incomes from Teagasc showed overall income had slumped 9pc to an average of €24,060 last year on the back of poor milk and grain prices.

Despite a fall-off of 17pc in dairy income to €51,809, it still remained far ahead of earnings from suckler farms at €12,908 on average, with sheep farms at €16,011.

A "strong rebound" to an average of €75,000 has been forecast for dairy incomes in 2017 on the back of rising milk prices and production flows. Yet it was tillage that was singled out by Teagasc director Professor Gerry Boyle as the "biggest challenge" on the back of a 10pc fall in income to €30,816. The experts warned poor grain prices are forecast for the year ahead and there are large stocks hanging over the market.

Farmers curbed the spending last year with investments back 13pc at €690m, with over €245m spent on dairy farms.

Two thirds of farms are carrying no debt with investments often funded out of cashflow but on the remaining third the average debt is €63,764.

Yet the National Farm Survey showed for the 59pc of dairy farms with debt, the average amounts to just over €99,000 or €850 per cow.

"The highest debt is on the farms that have expanded the most and that is in the region of €1,100 per cow," said Teagasc economist Brian Moran. "I don't want to be scaremongering - if we look across the EU the debt levels on Irish farms are very low."

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In an international context, the average debt level across the EU-27 stands at €3,000 per cow. In the UK it is €2,000 per cow, while the hi-tech Netherlands carries €10,000 per cow and it is higher again in Denmark.

"The debt levels are not high in the European context," he stressed.

However, in the lower income sectors the average debt for cattle finishing enterprises with borrowings was €39,000, while it stood at €54,500 on sheep farms.

CAP payments

The dependence on direct payments from Brussels was emphasised as GLAS payments and suckler herd payments under BDGP saw payments increase on cattle farms by 5 to 11pc.

It offset lower cattle prices and delivered a slim rise of between 2 and 4pc in earnings.

The predominance of sheep and suckling in the west was reflected in lower incomes, with the southeast the most profitable and the border region deemed most disadvantaged.

The ICSA's Patrick Kent pointed out dairying is set for a recovery in 2017 yet the cattle, sheep and tillage sectors have no prospect of significant improvement.

He said one of the worst years for dairying still far surpassed the other sectors.

"On a per hectare basis, the income of €924 for dairying was twice the income for tillage and beef farmers, two and half times better than suckling and three times the sheep income per hectare," he said.

"The focus of CAP supports for both pillars will have to be re-focused to a much greater extent on low income sectors."

One third of farmers held an off-farm job, with it remaining most prevalent in the west.


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