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.

Tillage farm profits on the top 10% of farms were much higher at €466/ha before BPS and €795/ha with the BPS included.

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.

Data source: IFAC

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.”