Chart: By how much will farm incomes be affected by Covid-19 this year?

Covid-19 could reduce Irish farm incomes by anywhere between 26% and 57% this year, depending on the outcome scenario. That’s according to a new report.

Analysis of a range of scenarios, conducted in the report published by Teagasc, finds that income in 2020 across the farming sector as a whole will drop – compared to forecast income (for 2020) before the advent of the Covid-19 pandemic.

The study looked at forecast 2020 outcomes across several different farming enterprises before Covid-19 struck. It then devised three scenarios – envisaged by the impact of the coronavirus.

Because the crisis is an evolving situation and its short-term impact will be dependent on how successful health strategies are in suppressing the virus, three different scenarios (detailed below) were considered.

These are based on factors such as: the collapse in demand from the food-service sector; a consequent product surplus, leading to steep reductions in commodity prices in 2020, and expected to run into 2021; and the relatively fixed nature of supply, based on the limited ability of farmers to cut production in the short term.

Under Scenario 1, Teagasc looked at: reductions of 10% on cattle, sheep and milk prices; an increase of 13% in pig prices; and a mixed tillage situation of no change in barley prices but a 10% increase in wheat prices.

In Scenario 2, the report analysed a situation involving: more drastic drops of 15% in cattle, sheep and farm-gate milk prices; a 5% increase in pig prices; and an unchanged wheat price but a 10% drop in barley prices.

Finally, in the worst-case Scenario 3, the study investigated: 20% cuts to cattle, sheep and farm-gate milk prices; no change in pig prices; and drops of 10% and 20% for wheat and barley prices respectively.

In the three coronavirus impact scenarios, income reductions are relative to forecast 2020 figures without Covid-19.

‘Cattle rearing’

‘Cattle rearing’ was deemed to be the worst-impacted enterprise by Covid-19. Under the forecast income for 2020, had the coronavirus not struck, cattle rearing enterprises had been predicted to notch up an average income of €9,399 in 2020.

Under Scenario 1, average ‘cattle rearing’ incomes are expected to take a hit of 39% – dropping to €5,689.

Under Scenario 2, average ‘cattle rearing’ incomes would drop by 60% due to Covid-19 – falling to €3,756.

Finally, under Scenario 3, average ‘cattle rearing’ incomes would fall by a whopping 78% – to just €2,085.

‘Cattle other’

Average incomes for ‘cattle other’ enterprises – as so described by Teagasc – had been forecast at €15,117 for 2020 (before the impact of Covid-19 was factored in).

Under Scenario 1, ‘cattle other’ incomes would drop by 41% – to €8,922.

Under Scenario 2, ‘cattle other’ incomes would fall by 58% – to €6,360.

Under the third and most drastic scenario, average incomes would nosedive by 74% – to just €3,896.

‘Sheep’

‘Sheep’ enterprises were forecast (before the impact of Covid-19 was factored in) to show an average income of €15,103 (for 2020).

Under Scenario 1, average sheep incomes would fall by 27% – to €10,989.

Under Scenario 2, average incomes would drop by 44% – to €8,448.

In Scenario 3, the fall would be 59% – dropping to just €6,252.

‘Dairy’

Average ‘dairy’ incomes had been forecast (for 2020) at €76,750 (prior to Covid-19).

Under Scenario 1, average dairy incomes would decrease by 21% – to €60,985.

In Scenario 2, average incomes would drop by 36% – to €49,346.

In the third and worst-case scenario, average dairy incomes would essentially halve – by 49% – to €39,505.

‘Tillage’

Average ’tillage’ farm incomes were expected to settle at €30,017 (for 2020; prior to Covid-19).

Under Scenario 1, average tillage incomes would fall by 6% – to €28,198 (suggesting that it would be the least-impacted enterprise).

Under Scenario 2, average tillage incomes would fall by 23% – to €23,031.

In Scenario 3, average incomes would drop by 41% – to €17,829.

Average farm income

Overall, it was expected that average farm income would be €25,724 in 2020 (up 5% relative to 2019) before the onset of coronavirus.

Under Scenario 1, average (overall) incomes would drop by 26% – to €19,112.

Under Scenario 2, average (overall) incomes would fall by 42% – to €14,906.

In the third and worst-case situation – Scenario 3 – the study predicts an average (overall) income of just €11,167 – a drop of 57%.

The report concludes that the total income reduction across Irish agriculture in 2020, as a result of the Covid-19 pandemic, could range from €0.7 billion to as much as €1.6 billion, depending on the scenario examined.

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