Farmer incomes predicted to fall

Wed, Jul 25, 2012, 01:00

LAST YEAR’S 30 per cent increase in farm incomes will be largely wiped out this year because of difficult weather conditions, according to a Teagasc mid-year outlook presented yesterday.

Dairy farmers will be hardest hit with a 30 per cent drop in income forecast.

Teagasc economist Dr Thia Hennessy said she expected farm incomes would fall back to 2010 levels because of the high summer rainfall in Europe combined with the US drought. The bad weather at home would result in farmers buying more feed for cattle and the US drought was resulting in an increase in grain and animal feed prices internationally.

Dr Hennessy said tillage farmer incomes were expected to remain more or less the same this year while beef farmers could expect to see an increase. When combined with the 30 per cent drop in dairy farmers’ incomes, she said most of last year’s unprecedented gains in income would be eroded.

Her fellow economist, Dr Fiona Thorne, said feed prices for the livestock sector were expected to increase by 15 per cent. Tillage farmers would see a drop in spring barley yields of 10-22 per cent, while the winter wheat yield was expected to fall 15-27 per cent.

Dr Thorne said both fuel and electricity prices were expected to increase by 8 per cent this year.

Teagasc principal research officer Trevor Donnellan said milk prices would fall by 15 per cent this year, but the outlook for beef farmers was more optimistic with gross margins expected to increase by 15-30 per cent.

Irish Farmers’ Association president John Bryan said the Teagasc analysis showed that 2012 was proving to be “a very challenging year” for farmers. “In addition, cuts to farm schemes over the last four years are beginning to impact very severely,” he said.

Mr Bryan said there must be no more cuts. “If farmers are to farm their way through this, it is critical that a fair price is given for their product. With over 40 per cent of our exports going into the UK, the continued weakening of the euro should provide a positive boost to product prices.”

Also yesterday, Teagasc presented an analysis of the targets in Food Harvest 2020, the industry’s plan for the agri-sector.

Teagasc economist Kevin Hanrahan said the plan produced a public policy dilemma of promoting strong growth in output while trying to reduce greenhouse gases. Targets include a 50 per cent increase in milk output volume, a 20 per cent growth in the value of beef and sheep output and a 50 per cent increase in the value of pig output.

Dr Hanrahan said agriculture already accounted for 30 per cent of our greenhouse gas emissions and that would clearly increase if these targets were met.