The changes in Irish farmers’ investment and debt patterns over the course of last year have been revealed in the preliminary results of the Teagasc National Farm Survey for 2020.

The survey results were released this morning (Monday, July 19), showing a general increase in farm incomes for last year.

The results offer an insight into the actions and decisions of Irish farmers last year – with an increase noted in investment overall, while the levels of farmers with debt remained steady.

Investment

Looking firstly at investment, the Teagasc National Farm Survey highlighted that gross new investment on Irish farms increased by 5% in 2020.

On aggregate, this totalled over €1 billion across the farms represented by the survey. Investment on dairy farms was highest, at an average spend of €30,585 per farm.

As such, investment on dairy farms accounted for almost half of total investment in 2020. That said, investment on dairy farms was down 11% compared to 2019.

Investment increased across drystock farms in 2020, following a number of years of decline, the survey notes.

However, on average, amounts invested across these systems were far below that of the average dairy farm.

Investment on tillage farms decreased substantially in 2020, down 40% on average, to €11,014 per farm.

The average level of investment on “cattle other” farms increased by almost 50% to €7,891. Investment on the average cattle rearing farm also increased in 2020, up 23% to €4,307. Investment on sheep farms increased substantially, more than doubling to €7,891, on average.

In terms of financing investment the Teagasc survey noted that, as average farm income increased across systems, (albeit modestly) except on tillage farms, overall debt on Irish farms declined on average in 2020.

Outstanding farm debt declined most strongly on tillage farms year-on-year, the authors highlighted.

It remains the case that, across all farm systems, almost two-thirds of farms have no farm business related debt.

Debt

Turning next to debt, the national average for 2020 showed that some 35% of farmers were in debt. The overall average loan amount came to €59,982, while the farm income of farms with debt came to a national average amount of €38,409. The overall debt to family farm income (FFI) – excluding farms with zero debt – came to 1.56 across all sectors.

Unsurprisingly, dairy farmers were the most likely to be in debt, with 64% of dairy farmers in debt – the same figure as the previous year. An average loan amount of €112,476 was recorded for dairy farms, while the average dairy farm income among farms with debt came to €79,658. Debt to FFI came to 1.41.

On the other end of the scale, just 26% of sheep farmers had debt last year (same as 2019), with an average loan amount of €30,894 and an average debtor farm income for the sector of €24,887. Debt to FFI amounted to 1.24.

“Cattle rearing” (suckler) farm enterprises were the next lowest, with 28% of these farms having debt in 2020 (down from 31% in 2019). The average loan amount taken by cattle rearer farms came to €25,642, while the farm sector average income was €8,181 among farms with debt. Debt to FFI was the highest among sectors – of 3.13.

Meanwhile, 31% of “cattle other” enterprises had debt last year (down from 34% the previous year) – with the average loan amount working out to be €38,634. Cattle other farms with debt had an average income of €16,123. A debt to FFI ratio of 2.40 applied in this sector.

Finally, the tillage sector saw 33% of farmers with debt in 2020 (down from 35% in 2019), with an average loan amount of €43,904, and an average debtor farm income of €49,605. Tillage had the lowest debt to FFI ratio – amounting to 0.88.

In a breakdown of debt type, the National Farm Survey noted that the majority of farm related debt was classified as medium to long-term in 2020 at 76%.

A further 16% related to hired purchase or leasing and the remaining 8% was considered to be short-term debt e.g. overdrafts.

On average, 78% of dairy farm debt was considered medium to long-term, with similar figures reported on cattle other and sheep farms. The comparative figure on cattle rearing farms was higher at 87%.

Conversely, only 34% of average tillage farm debt was classified as long-term, with 42% related to leasing or hired purchase and the remaining 24% considered to be short-term.

The full Teagasc National Farm Survey 2020 can be found here.