Declining incomes, poor weather conditions and increased production costs last year would suggest that all the unhappy circumstances were in place to push up farm-related debt in 2023.
However, according to latest research from Teagasc farm-related debt fell in general last year compared to 2022 – with a reduction of 5% on average across farm systems.
But this is not the complete picture according to Teagasc whose research also suggests that debt levels can vary “considerably” by farm type.
The Agriculture and Food Development Authority estimated that average debt on dairy farms fell by 10% in 2023 but on tillage farms it rose by 16%
On “cattle other farms” – mainly cattle finishers – it fell but on cattle rearing – suckler farms – it typically increased – despite a drop in 2022.
Meanwhile average debt on sheep farms was down “significantly” last year.
The data comes from the Teagasc National Farm Survey 2023, which is representative of almost 85,000 farms in Ireland.
According to Teagasc, the average family farm income in Ireland slumped by 57% in 2023 to just under €19,925 – down from €46,313 a year earlier.
In addition to this the average direct payment received per farm last year totaled €19,628 according to the latest Teagasc research.
Debt
The research also indicates that “across all farm systems, 62% of farms have no farm business related debt”.
However Teagasc also found that over two-thirds of dairy farms had farm related “borrowings” last year, compared to just over one-quarter of cattle rearing farms and one-third of “cattle other farms”.
According to the latest figures one-quarter of sheep farms had an outstanding farm debt in 2023, while nearly half of tillage farms also had a debt on their books.
A breakdown of farm-related debt shows that three quarters of farm related debt was
classified as medium to long-term in 2023 with a further 18% relating to hired purchase or leasing and the remaining 6% considered to be short-term such as overdrafts.
According to Teagasc the “deterioration” in farm incomes in 2023 resulted in an increase in the debt to income ratio across farm systems compared to 2022.
The average debt to income ratio on dairy farms in 2023, was 2.7 but this figure was higher on tillage and cattle rearing farms – averaging at 2.9 and 3.2 in 2023. On cattle other and sheep farms it came in lower at 2.4 and 1.6.