Irish dairy farmers had to produce 20% more last year to maintain the same income levels of 2014.
That’s according to the preliminary estimate of the Teagasc National Farm Survey results which shows that family farm income increased by 6% in 2015, bringing the average income figure for the farming sector to €26,526.
Speaking at the launch of the results in Dublin, today, Dr Thia Hennessy, Head of the Teagasc National Farm Survey said despite the considerable fall in milk price, increased milk production, combined with higher cattle prices, good weather conditions, reduced input expenditure due to lower fuel and animal feed prices, resulted in a 6% increase in average farm income in 2015.
Dairy slump
Milk price was down almost 20% in 2015, but income on dairy farms fell by just 4% to an average of €63,020.
The EU milk quota system, which was in place for 31 years, was removed in April 2015. The Teagasc National Farm Survey results show that considerable efficiency gains were achieved on dairy farms in 2015 with input expenditure declining despite the increase in output.
Almost one in three dairy farms increased their milk production by 20% or more, with just one-fifth of farms choosing to reduce production levels in 2015.
“The lower milk price in 2015 meant that dairy farmers had to increase their milk output by at least 20% to just maintain their income at the 2014 level”, said Hennessy.
Cattle incomes rise
Cattle prices increased considerably in 2015, between 6% and 16% depending on animal type, and this combined with reduced input expenditure meant that the average farm income on cattle farms increased considerably, in the order of 29 to 34%, depending on the production system.
While this magnitude of increase seems substantial, it should be borne in mind that average incomes are still quite low at just €12,904 on cattle rearing farms in 2015.
“Cattle farmers are still very reliant on direct payments which comprise a large proportion of income,” said Brian Moran of Teagasc’s National Farm Survey.
“However, 2015 represents the first year in recent times where cattle farms generated a profit from production before they received these payments”, he added.
Lamb prices stable
Lamb prices increased by just 2% in 2015, but incomes on sheep farms increased by 8% to an average of €15,791 on the back of strong cattle prices and reduced input expenditure.
The average gross margin per hectare on Sheep farms was €659 in 2015. This included a Basic Payment of €229.
Tillage area falls
Despite a modest reduction in the value of cereals, income on tillage farms increased by 16% to an average of €33,731, mostly due to strong cattle prices and lower fuel prices.
Gross output value on Tillage farms decreased by 1% from 2014 to 2015, while direct payments decreased by 12%. The reduction in direct payment is partly due to the 13% decline in the area of land rented by Tillage farms in 2015.
Borrowings
Over €800 million was invested by farmers in their businesses in 2015, over €300 million of which was invested on dairy farms.
Somewhat surprisingly, almost two-thirds of farms have no business related debt, with many choosing to fund new investment from working capital.
On the remaining one-third of farms the average debt level is €60,607, or 1.47 times the income level.
Direct Payments
Farming continues to remain highly reliant on direct payments.
The average direct payment per farm was €17,000 comprising 64% of farm income in general and almost 100 percent of income on cattle and sheep farms.
Off farm jobs
The farming population in Ireland includes a considerable number of part-time farms with almost one in three farmers working elsewhere off the farm.
Just over half of all farm households have an off-farm income source.