The increased commodity prices for various farm outputs so far this year, along with massive increases for farm inputs, mean 2022 is likely to be “unchartered territory” for farm incomes, according to Teagasc director Prof. Frank O’Mara.
Prof. O’Mara was speaking this morning (Tuesday, June 14) at the publication of results of the Teagasc National Farm Survey 2021.
The back end of 2021 saw an upward trend in both commodity prices and input costs. However, so far in 2022, both of these metrics have reached highs never seen before.
For that reason, the immediate assumption may be that the results of the 2021 National Farm Survey have been overtaken by developments in the first half of this year.
However, the Teagasc representatives who presented the results of the survey stressed the importance of the 2021 results in trying to predict how various farm systems will look in 2022, while also acknowledging new difficulties in generating farm income estimates for this year.
“It’s really important the we have good data of incomes going back every year and that we know what the incomes in 2021 were,” Prof. O’Mara said.
He added: “2022 is a new year, with change, and there is different factors that contribute to movement from one year to another. This year there is some very significant swings in terms of price. We’ll have to see what way that pans out.
“[The 2021 figures] are an important story themselves in terms of very good figures across most sectors. Beef is coming from a very low base, so the percentage increase doesn’t mean a lot in absolute terms. But on dairy, sheep and tillage, there are good rises.”
Teagasc research officer Trevor Donnellan – who, along with fellow research officer Emma Dillon, compiled and presented the survey results – noted that the basis for the authority’s forecasts for incomes in a given year is knowing what they were in the year just preceding it.
However, initial estimates for 2022 that were published in December were revised and republished in April in light of the Russian invasion of Ukraine. Donnellan said that Teagasc may consider a further revision of those estimates in the near future.
“I don’t think we will ever have had as challenging a year as we will in 2022 in trying to get an early estimate of income levels across the different farm systems,” he remarked.
This, Donnellan explained, is not just because of the “quite significant” extent of the price changes, but also possible adjustments to the volume on inputs that farmers might purchase, which is more difficult to anticipate ahead of time.
“In some cases, we may need to wait and see the actual data on things like, for example, the volume of fertiliser use and the volume of feed use in particular,” the research officer added.
Donnellan commented: “I wouldn’t want to be starting out my career trying to estimate 2022.”
He noted that the positive farm income story for 2021 in important as it provides an “anchor point” in terms of what is happening in 2022.
“In all likelihood, I think for 2022 for some of the farm systems we will probably see income levels that are on par with what was achieved in 2021. In other systems we may yet see a decline in income, but the fact that income levels have risen in 2021 might create a but of a buffer there for 2022.
“But it is still a little bit early in the year to make any kind of concrete estimate as to what the farm system level income will actually look like across the board. Having said that, that’s the job we have to do in the next few months,” Donnellan added.