394% increase in tillage farm profits, but 57% dependent on BPS
The average tillage farm showed a massive 394% increase in profit from 2017 to 2018 according to IFAC’s (Irish Farms Accounts Co-operative’s) Irish Farm report 2019, which was launched this morning, June 20, in Co. Laois.
The report includes views from over 2,000 farmers and provides a detailed analysis of trends from the accounts of over 22,000 farms.
Tillage farm profits
The figures show that the average tillage farm made €252/ha in profit before the basic payment was added in. That figure rose to €581/ha with the BPS.
However, it should be noted that only 43% of tillage farmers achieved a profit before BPS, meaning that there was a large difference between the top and the bottom of the ladder.
The figures are much greater than the past four years. In fact, in 2015 the average tillage farm profit was -€108/ha and only started to turn a profit when the BPS was added in.
It will come as no surprise that 80% of tillage farms had an off-farm income in 2018.
Borrowings, Investment and debt
On a positive note, 35% of tillage farms included in the report have no business debt. IFAC’s data also shows that the average financial borrowings on tillage farms is €88,137 and in 2017 the average investment on tillage farms amounted to €36,622.
In its report IFAC noted that: “To service their debt, farmers need to achieve healthy profits after drawings, tax and capital repayments.
Repayments on an €88,000 loan over seven years at an interest rate of 4% comes to €11,424 before interest.
“Without CAP, it would not be possible for tillage farmers to service debt, pay taxes and provide a family income.”