The average “shadow wage” or economic value of farm family labour on Irish dairy farms has been estimated at €30.97/hour, according to new research.
The study, carried out by Teagasc and the University of Galway, focused on investigating the “unpaid labour element” of milk production.
In order to achieve this the researchers determined “how much each hour of unpaid family labour adds to the value of farm output”, with this value referred to as the “shadow wage of labour”.
The findings of the academic paper, which is currently under peer review, have been outlined in the latest edition of Teagasc’s science magazine, TResearch.
Shadow wage
A shadow wage is the hypothetical or implicit wage rate which reflects the value of labour provided by individuals who are “not formally compensated for their work”.
The term covers the economic value of unpaid labour, such as family labour on farms.
The study notes that the expansion of milk production in the post-quota era has placed additional labour requirements on family farms which are met by both family and hired labour.
Using data from the 2019 Teagasc National Farm Survey, the researchers found that as the size of a farm increases, so does the shadow wage.
On farms with less than 43 cows the shadow wage stood at €12.17/hr, while for holdings with greater than 83 cows that figure rose to €43.94/hr.
As the shadow wages increase, the study found so does the demand for hired labour which the researchers said indicates that, on average, family and hired labour act as substitutes on Irish dairy farms.
The team, including Luis Garcia-Covarrubias, a postdoctoral research associate at University of Galway, Emma Dillon, senior research officer with Teagasc and Fiona Thorne, principal research officer with Teagasc, also determined that agricultural education influences shadow wage.
The average shadow wage of those with formal agricultural education is almost twice that (€34/hour) of those without (€19/hour).
The research, funded through the Teagasc Walsh Scholarship Programme, found that farm operators who have undertaken formal agricultural training reported higher levels of farm income.
Supports
Emma Dillon told TResearch that the findings “support the idea that policies to increase formal agricultural education for farmers are essential for the farms’ viability and the industry’s future”.
The team recommended continued support for agricultural education through policy incentives.
They added that “an improved understanding of the supply and demand dynamics between family and hired labour essential for the long-term viability of the dairy sector”.
When it comes to smaller farmers, the researchers said that financial support may be needed to help these farmers hire extra labour during busy periods, particularly spring calving season.