While last year was good for Irish farmers, with income up 36 per cent on the difficult year of 2023, there are clouds on the horizon.
Over a third of farm income comes from European Union subsidies. The current structure of the EU Common Agricultural Policy (CAP) runs out in 2027 and, given the demands on the EU Budget, the next CAP will likely be less generous than today’s.
Preparing for a reduced subsidy regime in the future, and the need to make major changes to reduce greenhouse gas emissions, poses difficult challenges for farmers.
When Ireland joined the EU (then the European Economic Community) in 1973 there was an immediate huge boost for farmers, raising their income overnight by a quarter. Substantial subsidies from Brussels, combined with access to the higher prices available in the Common Market, transformed living standards in rural Ireland.
Today, access to the EU market for Irish agricultural produce remains a huge plus, but as EU prices are generally close to those on world markets, this is less important for farming than it was in 1973. However, the subsidy regime under the CAP remains vital.
As shown in Teagasc’s report last week, there is considerable diversity in incomes across the farming community. In 2024, dairy farms made an average of around €108,000, or about €80,000 excluding the EU subsidies. With an average of two people working per farm, this amounted to an income of around €54,000 per person, somewhat higher than average incomes in the non-farm sector.
Dairy farms account for less than 20 per cent of all farms. For the rest of the agriculture sector, the income situation is much less satisfactory.
Agriculture accounts for 35 per cent of Irish greenhouse gas emissions. Policy should not be about farmers giving up, it should be about finding better ways to use their skills and their land sustainably
In 2024, the income from rearing beef cattle averaged under €14,000 and, given that EU subsidies averaged €18,000, it’s clear that beef farming is fundamentally loss-making. The average age of beef farmers was over 60, and given the tiny returns from cattle, most had either off-farm jobs or were pensioners.
Similarly, sheep farming did not pay its way before subsidies. Tillage farming barely earned a return above the subsidy – EU subsidies accounted for €32,000 of the average €39,000 earned by tillage farmers.
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In 1980, three-quarters of the EU budget went on farm support, but since then the share has been whittled back.
The CAP now accounts for a quarter of that budget. Over the next two years the EU will determine its medium-term budget for 2028 onwards. Faced with so many other demands, not least for security, the allocation to agriculture is likely to fall.
The extensive support for Irish farmers from Brussels substantially offsets the State’s contribution to the EU budget. Although Ireland is one of the richest countries in the EU, its net contribution to the EU budget is limited. This leaves Ireland in a weak position to argue that CAP measures that favour us should continue to get major funding. So subsidies will be lower.
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Future EU farming policy is also likely to have a strong focus on climate measures. Agriculture accounts for 35 per cent of Irish greenhouse gas emissions. Policy should not be about farmers giving up, it should be about finding better ways to use their skills and their land sustainably.
Beef farming is likely to fall over the next decade, with fewer subsidies to keep it afloat. That will leave some room for increased milk production, which is very profitable. Given how labour-intensive dairying is, with twice-daily milking, that won’t suit most part-time or older farmers. Other productive alternatives to beef rearing need to be identified.
Agri-forestry could be very profitable – Ireland has an excellent climate for growing trees. It would also capture carbon, helping with our climate targets, as well as providing an important future resource of timber. However, the current red tape and regulation around establishing forestry make this impossible to deliver. No other crop is subject to the onerous licensing system around planting, thinning and harvesting.
Fertiliser use is responsible for major emissions of long-lived greenhouse gases. A drop in farming’s emissions was achieved as a side effect of the rise in gas prices, and consequently of the cost of fertiliser, following the invasion of Ukraine. When fertiliser prices rose 50 per cent between 2021 and 2023, Ireland’s use dropped by 30 per cent.
In this vein, rising charges for emissions, or an emissions trading system, may also be part of the future farming environment. Emissions pricing is not an alternative to developing more appropriate land uses, rather it should complement a strategic change in how we use land, and a focus on sustainable farming activities.
