Income steady at €25k
Published 02/08/2014 | 00:00
THE final results from the Teagasc National Farm Survey 2013 show that the average income level on Irish farms remained steady in 2013 at an average of €25,437 per farm. However, the stability in the average income level, masks dramatically contrasting fortunes across the different farming enterprises.
The Teagasc National Farm Survey also published last week their Enterprise Factsheets for 2013, for the Dairy, Single Suckling, Cattle Finishing, Mid-season Lamb and Cereal enterprises.
According to the report, all grassland based farming suffered dramatic increases in purchased concentrate, bulky feed and fertiliser expenses because of the late spring in 2013, following on from the impact of the fodder crisis in 2012. In the second half of 2013 expenditure on fertiliser increased as farmers sought to restore stocks of conserved forage.
The report found that average dairy margins in 2013 increased, but margins for all the other enterprises decreased due to higher costs of production.
Gross margins on farms with a dairy enterprise increased in 2013 by 28% to €0.23 per litre, almost fully reversing the large decline experienced in 2012. In 2013, milk produced per hectare increased by 9% while average dairy farm net margin per hectare was up 64%.
Trevor Donnellan of the Teagasc Agricultural Economics and Farm Surveys Department said that: "The increase in dairy farm margin was driven by the large increase in the milk prices received by farmers along with additional production per hectare. Like other grassland systems, direct costs of production on dairy farms (mostly feed and fertiliser) increased in 2013, direct costs were up 8% on average while total fixed costs increased by 6%. However, unlike cattle and sheep farmers, the increases in output prices received by dairy farmers were sufficient to deliver strong margin growth".
Owing to the increase in feed usage, total direct costs of cattle finishing increased by almost one fifth (18%) between 2012 and 2013. This increase was mostly due to a 20% increase in expenditure on concentrate feeds and a 19% increase in pasture/forage costs.
On average, cattle finishing enterprises suffered a loss of €133 per hectare in 2013; this loss is 166% higher than the loss incurred in 2012. The sale prices for finished animals declined by circa 10% between 2012 and 2013.
Anne Kinsella of the Teagasc Agricultural Economics and Farm Surveys Department said "There is a notable difference between the margins earned on the top performing and bottom one third of farms, mostly due to superior productivity rather than differences in prices paid and received for animals. In 2013 one 11% of cattle finishing enterprises earned a negative gross margin... while over one third earned a gross margin of €500 or more per hectare in 2013."
Single suckling to weanling is the most prevalent production system, operated on one third of farms. However, single suckling farms that take cattle to finish was the most profitable suckling system in 2013.
Despite declining prices in the majority of cattle categories in 2013, gross output on suckling farms increased by 4%, on average. The increase in output value was, however, insufficient to cover the large increase in production costs, direct and fixed costs which increased by 20% and 4% respectively, with expenditure on concentrate feed increasing by almost one third (30%). On average, the negative net losses on suckling enterprises were 167% higher in 2013, increasing from a loss of €46 in 2012 to a loss of €123 in 2013.
When farms are classified on the basis of gross margin per hectare, the best performing one-third of farms typically achieve a 10 - 22% price premium for their animals when compared to farms in the bottom group, according to the survey. Anne Kinsella of the Teagasc Agricultural Economics and Farm Surveys Department said "This suggests that the top group of farms are producing animals that are better aligned with what the market is demanding." However, the top producing farms were also found to have the benefit of better soil quality. This group earned a gross margin of €588 per hectare in 2013, more than 13 times higher than the margin earned by the bottom group.
In 2013 the share of mid-season lamb producers achieving the weaning and stocking rate targets that are set out in the Teagasc Road Map for sheep production increased. The average weaning rate per ewe increased by 8% to 1.3 lambs/ewe, while the average stocking rate per hectare increased to 7.5 ewes.
However, performance along the other technical indicators deteriorated with the poor weather requiring increased levels of concentrate usage.
"The hard winter and late spring of 2012/2013 meant that some of this improvement in weaning and stocking rates was offset by higher levels of lamb mortality, which increased by 13% in 2013", said Dr Kevin Hanrahan of the Teagasc Agricultural Economics and Farm Surveys Department.
Overall the volume of lamb carcass produced per hectare in 2013 increased by 14kg (8%) in 2013. Just 16% of farms had flocks of 150 ewes or more and these farms accounted for 17% of total lamb production.
In 2013, a quarter of mid-season lamb enterprises earned a gross margin of less than €300 per hectare while at the opposite end of the distribution, one tenth of farms earned a gross margin of €1,000 or more in 2013. When mid-season lamb farms are classified on the basis of gross margin per hectare; the margin was almost five times higher on the top farms as compared to the bottom farms and the gross output on the best performing one-third of farms was more than double the output of the bottom group of farms, due to higher weaning and stocking rates. However, total direct costs were only 6% higher for the top group verses the bottom group, despite the significantly larger output.
On average, total direct costs increased by a quarter with expenditure on concentrate feed increasing by 40%. The average net margin per hectare declined by 75% in 2013 as compared with 2012, according to the Teagasc report.