Average farm income rises '5 to 10 per cent'

David Tucker

Published 24/09/2013 | 05:30

DESPITE the difficulties encountered at the beginning of the year, average farm income rose by between five and 10 per cent this year, according to AIB's Enniscorthy-based agri-advisor Liam Phelan.

DESPITE the difficulties encountered at the beginning of the year, average farm income rose by between five and 10 per cent this year, according to AIB's Enniscorthy-based agri-advisor Liam Phelan.

While this would still leave incomes below the record levels achieved in 2011, average farm incomes would still be at the second highest level since 2005.

Expenditure on many farms increased in the first half of the year as a consequence of fodder shortages, poor grass growth and the adverse weather conditions and as result many farmers experienced cash flow pressure.

While this cash flow pressure was in the main, weather related and short term in nature, this year has highlighted the importance of ensuring that adequate working capital facilities are in place.

Mr. Phelan said that looking ahead to the coming winter, 'We are encouraging farmers to examine their cash flow requirements and to ensure they have sufficient working capital in place, particularly where there may be a fodder deficit and to act now, if they envisage that additional support will be required'.

Looking at the individual farm sectors, milk prices started an upward trend last August (2012), and in May of this year prices reached 38c/l (VAT inclusive), the highest summer price ever recorded. There has been some price increases in recent weeks and it is now likely that prices will average in excess of 37c/l for the year which would also be an historic high.

High feed usage and prices during the winter and spring will have added to production costs for dairy farmers nevertheless, we expect incomes on dairy farms to be substantially up on last year.

Ireland was 1.44% under quota, at the end of July (for the quota year), however milk production in the second half of the year is likely to be up on last year driven by a strong milk price and favourable weather conditions, making it highly probable that there will be a superlevy this year.

Beef prices had been on an upward trend since 2009 and prices in 2012 increased by about 12%. While prices have weakened somewhat from earlier this year, they are still (end August) over 6% ahead of last year and should remain well above the average level of 2012 and well above the level of years earlier. A drop in feed usage, together with a continuation of relatively strong prices, should improve beef margins in 2013. The strong prices in the dairy and beef sectors are the main driver behind the positive outlook for farm incomes.

Mr. Phelan said grain prices, which rose dramatically last harvest, (up 35% on the previous year) are expected to decline by about 25-30% this year. This would leave prices at about the same levels as 2011 and 2010 and well above the level of the previous decade. It is expected that the improved yields will offset some of the impact of the reduced price this year. However, similar to last year, world market price developments during the remainder of harvest and the marketing season may exert an influence. Sheep prices have fallen back in recent weeks and are currently, below prices last year. Over the year as a whole, prices are likely to be slightly back on 2012, but throughput is likely to be up by about 10%.

Overall, the farm income outlook for this year looks quiet good, underpinned by strong output prices.

Fodder should not be the same problem it was last year and feed prices are likely to moderate. Even allowing for the extra costs incurred earlier in the year, average farm incomes should rise between 5% and 10%, leaving incomes below 2011 levels but ahead of earlier years.

Enniscorthy Guardian

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