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Thursday 13 December 2018

Dairy sector drives average farm incomes higher in 2017

Tim Davies ridging the headland for carrot beds for Leo Dunne, Durrow on the land of Seamus Duggan, Durrow, Co. Laois on Sunday 6 May 2018.
Picture: Alf Harvey.
Tim Davies ridging the headland for carrot beds for Leo Dunne, Durrow on the land of Seamus Duggan, Durrow, Co. Laois on Sunday 6 May 2018. Picture: Alf Harvey.
Ciaran Moran

Ciaran Moran

An increase in average incomes on farms last year was almost completely driven by the very large increase in income observed on dairy farms, according to new figures from Teagasc.

It released preliminary results from its National Farm Survey (NFS) for 2017, detailing the performance of various farm types and the associated level of farm income.

The survey indicates that average farm income rose to over €31,300 in 2017, an increase of over €7,500 on the 2016 average farm income.

However, it remains the case that more than two thirds of the farms represented by the survey saw little change in their income in 2017 in comparison with 2016.

Strong Dairy Performance 

The 2017 NFS showed a dramatic increase in income on dairy farms. This was driven by a very substantial jump in the farm price of milk and continuing growth in the volume of milk produced. In particular, the sharp recovery in milk prices in 2017, led to much higher profitability in dairy farming than was the case in 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.  Over 70pc of dairy farms achieved an income in excess of €50,000 in 2017.

While 2017 was a relatively benign year for expenditure on purchased inputs on dairy farms, the results of the Teagasc NFS for 2017 show evidence of increased farm investment and a higher level of expenditure on hired labour compared with 2016.

Little change in Drystock Incomes

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 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.

Higher Crop yields and lower Tillage costs

The average income on tillage farms also increased from the €31,000 in 2016 to €37,200 in 2017, with the increase mainly associated with higher yields and lower production costs. Given that tillage farms are typically larger in size than other farm types, the average income on tillage farms in 2017 remained low.

Winter 2017/Spring 2018

In the Teagasc NFS results for 2017 some of the cost pressures associated with the early onset of winter conditions last year are also evident, with expenditures on feed elevated relative to what would be considered as normal.

While the issue of a fodder shortage has been prominent in farm media commentary since last winter, it should be noted that most of its financial impact on farms will be felt on incomes for 2018 rather than for 2017. These will be recorded in the 2018 Teagasc NFS.

Volatility

IFA President Joe Healy said the increase in average farm income for 2017 to €31,300 comes off the back of a difficult year in 2016. 

"Farming on the whole remains a low-income activity, with average earnings well below the average industrial wage,” he said.

Healy said the 2017 figure is influenced by the positive performance from dairy farms, the vast majority of which are full time, with higher volumes and better prices after a difficult year in 2016. 

"It also illustrates the extreme income volatility which challenges dairy farmers: milk prices have been cut by up to 6c/l this year already, and spring volumes have suffered from the bad weather. 

"EU market supports and voluntary risk management tools, including through national tax-based measures, must be developed to help farmers cope with those sharp swings in cash flow,” he said.

 Healy said the Teagasc income figures on livestock clearly demonstrate the dependence of dry stock farmers on direct payments and the need for strong additional support for suckler farmers.

He said the figures fully support the IFA campaign for additional targeted support of €200 for suckler cows.

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