Family farm incomes drop by 9% to €24,000 in 2016

Family farm income decreased by 9% in 2016, bringing the average income figure for the farming sector to €24,060, according to a preliminary estimate of the Teagasc National Farm Survey results.

This is the return for the farmers’ labour and for the land and capital employed in the business, says Teagasc.

“Despite increased direct payments and a reduction in some of the key input items such as fertiliser, further falls in milk prices and poorer crop yields than in recent years resulted in a 9% decline in average farm income in 2016,” explained Dr. Emma Dillon, Economist with the Teagasc National Farm Survey. She was speaking at the launch of the results in Dublin today (May 31).

The continued roll-out of GLAS and the Beef Data Genomics Programme (BDGP) saw direct payments on cattle farms increase by between 5% and 11% in 2016 – relative to the previous year.

This increase helped to offset lower cattle prices and it meant that the average farm income on cattle farms increased by between 2% and 4% in 2016, depending on the production system.

Despite this increase, average cattle farm incomes remain quite low, at just €12,908 for cattle-rearing farms in 2016.

Reliance on direct payments

“Cattle farmers are still very reliant on direct payments, which comprise a large proportion of their income,” said Brian Moran of the Teagasc National Farm Survey.

The BDGP and GLAS schemes are of particular importance on cattle and sheep farms.

“Milk price was down almost 10% in 2016, on the back of a 20% reduction in 2015. Despite this, milk production continued to expand in 2016. This resulted in income on dairy farms falling by 17% to an average of €51,809.”

The Teagasc National Farm Survey results show that considerable efficiency gains continue to be achieved on dairy farms in 2016. Analysis of farms over the period since quota removal shows that four out of every five dairy farms have increased production.

“Increases in milk volume and production efficiency further reduced production costs in 2016, but lower milk prices meant that dairy farmers were unable to maintain their incomes,” said Teagasc Economist Trevor Donnellan.

Tillage incomes drop by 10%

Tillage farms were severely affected by a decline in crop yields in 2016. Coupled with a reduction in the price of cereals, this resulted in a 10% fall in average tillage farm income to €30,816.

Sheep incomes stable

Lamb prices decreased by 2% in 2016 and, with direct payments receipts relatively unchanged, the average sheep farm income remained stable at €16,011.

On-farm debt and investment

Almost €690 million was invested by farmers in their businesses in 2016, of which over €245 million was invested on dairy farms.

As in previous years, 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 €63,764 or 1.8 times the income level.

Farming continues to remain highly reliant on direct payments. The average direct payment per farm was nearly €18,000 in 2016, comprising 75% of farm income on average and almost 100% of income on the average cattle and average sheep farm.

Part-time farming

The farming population in Ireland includes a considerable number of part-time farms, with almost one in three farmers working elsewhere off-farm. Just over half of all farm households have an off-farm source of income from either the farm-holder or spouse.

In spite of the fall in income in 2016, says Teagasc, average farm income has become less volatile over the last five years. Looking ahead to 2017, it says that prospects for dairy are very positive, with a dramatic recovery in incomes forecast. Average incomes on drystock farms should remain relatively stable.

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