Farm Ireland
Independent.ie

Wednesday 24 October 2018

Dairy in the driving seat: What are the defining long-term trends in Irish agriculture

 

Mike Brady

Mike Brady

Another year, more farm surveys and yet the results and conclusions remain the same.

The Teagasc National Farm Survey 2017 (preliminary results) and the CSO Farm Structure Survey 2016 were released last week and confirmed much of what we know about trends in the industry.

Firstly, the Teagasc National Farm Survey showed that family farm income increased from €23,848 in 2016 to €31,300 in 2017.

On the face of it, a €7,452 increase in income is a very positive result for farmers.

However, as expected, it is primarily down to the increase in the milk price and to a lesser extent an increase in grain prices.

Beef and sheep incomes remained largely unchanged.

Results for the two cattle systems presented in the Teagasc NFS report (Cattle Rearing and Cattle Other) indicate very little change in income in 2017 relative to 2016, with average income per farm in 2017 for these two systems of about €12,500 and €16,500 respectively.

In the case of sheep farms in 2017, the average income increased by about €1,000 to €17,000, largely due to the increase in support provided to the sector via the Sheep Welfare Scheme.

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The average income on tillage farms also increased from €31,000 in 2016 to €37,200 in 2017, with the increase mainly associated with higher yields and lower production costs.

However, given that tillage farms are typically larger in size than other farm types, the average income in the sector remained relatively low.

Dairy farming showed a dramatic increase in income in 2017; this was driven by a very substantial jump in the farm price of milk and continuing growth in the volume of milk produced.

The sharp recovery in milk prices in 2017 led to much higher profitability in dairy farming when compared to 2016.

The average income on dairy farms is estimated to have increased from just over €52,000 in 2016, to over €86,000 in 2017.

Increase

This whopping €34,000 increase in dairy farmer incomes is more than double the actual income of beef and sheep farmers.

In fact, the average income of dairy farmers in 2017 was almost six times greater than beef farmers and five times greater than sheep farmers.

The CSO Farm Structure Survey 2016 shows that specialist beef production is the most common enterprise in the country, with over 72,400 beef farmers out of a total of 137,500 farmers.

Specialist dairy farmers number 16,700.

With the average farm size in the country of 32.4 hectares, there is plenty scope for change in these numbers in favour of more dairy farmers.

If we grow at the same rate as New Zealand's dairy industry did in the 40 years between 1978-2018, there would still only be a third of the land area in this country in dairying by 2058.

Just over half of farmers (53pc) viewed farming as a sole occupation, a quarter (25pc) as a major occupation and the remainder (22pc) as a subsidiary occupation.

In my opinion, the number of part-timers will grow as pressure on premia and subsidies take effect after Brexit and CAP 2020-27.

Taxation

The recession is now well and truly over, with unemployment rates heading toward record lows.

The rebirth of the construction industry is evidenced by the increasing number of cranes on the skyline of our cities and major towns, and re-emergence of the high-visibility vest in the queues at our deli counters.

This will surely mean decreasing numbers of full-time farmers in future CSO surveys, as they exit farming to avail of attractive taxation terms for long-term leasing and take up off-farm work.

It is difficult for politicians and farm leaders to say this is good for the industry, but in reality it has been happening for decades and will continue to happen regardless of what unfolds from Brexit or from CAP reform.

New CAP package must take account of incomes divide: ICSA

The structure of CAP payments needs to be overhauled to address the growing divide between dairy and other farming sector incomes, the ICSA has warned.

ICSA president Patrick Kent has said the static income figures for drystock farmers demonstrate where CAP supports need to be directed.

“The differential between the different farming systems is growing. Comparing like with like, the average per hectare income from dairying at €1,530 is 4.75 times higher than sheep farming at €322 and 4.2 times higher than cattle rearing at €364.

“Beef finishing systems are slightly better at €451 per hectare. So the post-2020 CAP is going to have to address this huge inequality and more supports — both Pillar 1 and Pillar 2 — must be directed at low-income sectors,” said Mr Kent.

“We would question whether the ANC payment should be spread so thinly. Apart from the challenge of farming marginal land, the payment should also be more closely aligned with supporting the farmers with the lowest profitability,” he continued.

“Annual incomes averaging as low as €16,897 for sheep farmers, €16,651 for beef farmers and €12,680 for suckler farmers reveal the stark reality for the majority of our cattle and sheep farmers.

Reliance

“It is notable that the direct payments on dairy farms are actually marginally higher than on cattle and sheep farms,” added Mr Kent.

“However, the average dairy farm derives 23pc of income from direct payments but the reliance on direct payments on beef farms is 93pc of income.

“Worse still, on cattle rearing and sheep farms, direct payments equate to 113pc of income.”

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