Covid-19 could cost Irish farmers up to €1.6 billion in terms of reduced incomes this year Teagasc has warned.
Beef farms are the most exposed to the impact of the pandemic, with incomes potentially collapsing by almost 80pc should factory prices for cattle drop back by 20pc.
However, all sectors are likely to be hit, according to Teagasc’s economists, with incomes from dairy, sheep and tillage falling by between 40pc and 60pc in the worst case scenario, and the overall hit to the wider sector being at least €0.7 billion.
The beef industry is directly in the firing line of the pandemic. Teagasc forecast that the recent downturn in beef demand could see average family farm income from cattle rearing fall to just €2,085 if beef prices fall 20pc.
A 15pc drop in cattle prices would cattle rearing incomes fall by 60pc to €3,756, while a 10pc reduction in cattle prices would result in a 39pc fall in incomes to €5,689.
Cattle finishers will be equally hard hit, with incomes expected to fall by 41-74pc. Finisher incomes were expected to reach €15,117 this year. However, 10pc drop in factory prices due to Covid-19 will see incomes fall 41pc to €8,922.
A 15pc drop in factory returns will result in finisher incomes falling 58pc to €6,360, while a 20pc reduction in beef quotes will see incomes fall by three-quarters to €3,896.
The fall in sheep farmer returns is not forecast to be as severe as that for beef , but is equally serious given the low level of incomes in the enterprise.
The Teagasc report predicts that sheep farmer incomes will fall by between 27pc and 60pc, depending the level of price reduction relative to 2019.
A 10pc reduction in sheep prices will see incomes fall to almost €11,000. A 15pc reduction in prices, meanwhile, will cut average sheep farmer incomes to almost €8,500, with this figure falling to €6,250 if sheep quotes drop back 20pc relative to 2019.
Incomes on dairy farms will also be hit and are forecast to fall by over €15,000 if milk prices drop by 10pc.
However, a 20pc drop in milk prices relative to 2019 to 27.2c/L (VAT exclusive) – which has been touted in some quarters – will result in a halving of family farm incomes to €39,500.
Tillage farmer incomes are forecast to fall by between 6pc and 41pc, with the worst case scenario emerging should wheat prices drop by 10pc and barley by 20pc.
The report by Teagasc economists paints a bleak picture for the farm sector, with incomes forecast to fall by at least €0.7 billion in the best case scenario.
The report accepts that full extent of the impact of the COVID-19 pandemic on the Irish agri-food sector is difficult to anticipate, and will depend on how long the current crisis lasts, and the effectiveness of the various measures introduced by national governments.
However, Teagasc contends that the crisis will increase the share of farms that are considered vulnerable.
It adds that the downturn in the wider economy will compound the impact of income losses in farming because of the dependence of many farm households on off-farm employment.
Worryingly, Teagasc does not expect an immediate rebound in incomes. It argues that depressed demand, associated with low economic growth, will result in a build-up of unsold stocks and that this will slow the recovery in farm prices and farm incomes.