Irish farmers dodged a €470m income hit thanks to the pre-Christmas Brexit Deal, and will enjoy a modest lift in farm profits this year, Teagasc has forecast.
A new report by Teagasc estimates that the average family farm income (FFI) will increase by 3pc to €25,600 in 2021. This is up from €24,750 in 2020.
Teagasc economists had warned in November that a hard Brexit could lead to an 18pc collapse in farmer earnings as agricultural exports to Britain faced serious disruption in such a scenario.
This had the potential to cut €4,500 on average from farm earnings, or more than €470m across the country’s 90,000 food producers.
However, the Trade and Co-operation Agreement (TCA), concluded on Christmas Eve of last year, ended the prospect of a worst-case impact on trade between the EU and UK.
Teagasc now predict a stable year ahead for farm incomes.
Dairy farming remains by far the most profitable enterprise, with incomes forecast to hold at an average of €69,000 for the year ahead.
Tillage farmer incomes are predicted to recover by 17pc this year after the disastrous 2020 harvest. Earnings in the sector are forecast to rise from an average of €29,000 to €34,000.
Teagasc predict that the recent improvement in sheep sector returns will be maintained through the rest of the year, with incomes rising by 6pc to reach an average of €20,400.
Returns from cattle enterprises remain weak, although they are forecast to improve marginally.
The average income from cattle rearing is predicted to increase from €10,600 to €11,200. This is an increase of 6pc, and comes on the back of 17pc lift in 2020. However, these improvements are from a very low base.
Meanwhile, in the ‘cattle other’ category, incomes are forecast to increase from €13,800 to €14,300 in 2021. This is a 3pc lift.
The Teagasc Outlook 2021 report predicts increased output prices for most commodities over the coming 12 months.
Irish farm output prices are projected to increase marginally in 2021 for milk, while prices are set to rise about 4pc in the case of cattle and lamb. International prices for cereals at harvest 2021 are expected to be slightly lower than 2020 harvest prices overall, due to projected increases in supply.
Pig prices are the one notable exception, with returns set to fall by 10pc in 2021. This relates to reduced demand for EU pigmeat in China, where domestic production is beginning to recover from the devastating African Swine Fever (ASF) epidemic.
However, price increases in the drystock, dairy and tillage sectors will be largely eroded by increased input costs.
The Teagasc economists predict that fertiliser costs are expected to rise by 10pc, fuel by 7pc and feed by 3pc.
The report predicts that milk prices will hold steady in 2021 at around 35c/l, with the average farmer margin being 10.5c/l.
Despite Brexit, Teagasc forecasts a marginal lift in cattle prices this year on the back of tighter supplies in the EU and the UK.
While production costs for sucklers farmers and beef finishers are forecast to increase by 2-2.5pc, these will be offset by a 4pc improvement in cattle prices.
Stronger earnings are also forecast for the sheep sector, as Irish lamb continues to benefit from reduced EU access for British product.
However, much of the forecast 4pc increase in lamb price will be offset by a 3pc hike in input costs. Despite this, the average gross margin on Irish mid-season lowland lamb enterprises is forecast to increase to €930/ha.
Meanwhile, revenues on cereal farms are set to claw back some of the losses suffered in 2019 and 2020. Tillage farmer profits fell by 25pc since 2018, dropping from €40,000 to €29,000 last year.
Cereal grower earnings are predicted to bounce back to €34,000 in 2021, despite a 5pc forecast fall in harvest prices.