The head of a new survey on Irish farms has said he expects an even worse financial year for 2009, after figures released showed a 13.7 per cent drop in farm incomes last year.
The Teagasc National Farm Survey for 2008 cited increased overhead costs and a drop in output in tillage and dairy farms as the reasons for the income drop. It found that average incomes for farms throughout the country last year was €16,993, compared to a figure of €19,687 for 2007.
This comes despite the 2007 survey showing incomes to have risen from the previous year by 18 per cent.
Liam Connolly, head of the survey, said: “2007 was a bumper year for farmers, but events have caught up with them. It looks like 2009 will be an even worse year.”
The survey consisted of an analysis of 1,102 farms, representing a total of 104,800 farms nationally. It found that tillage farmers were the hardest hit, seeing their income drop by 52 per cent from €40,611 in 2007 to €19,380 in 2008. This is thought to have resulted from a 20 per cent increase in production costs and a 15 per cent fall in market output.
However, despite the income reductions, investment in farms hit record levels, with €2 billion estimated to have been spent on on-farm developments such as buildings and machinery.
This increased investment led to a 30 per cent increase in borrowings for all farms for 2008. According to Dr Cathal O’Donoghue, head the Teagasc Rural Economy Research Centre.
“Farmers’ investment decisions over the last three years will continue to impact on income levels in future years, as loan repayments and depreciation contribute to the higher cost levels,” he said.
Fine Gael agriculture spokesman Michael Creed said the survey painted a "glum picture".
“Teagasc’s 2008 survey makes for grim reading but the harsh reality is that the picture in 2009 will be even glummer. This will be particularly so for the dairy sector where production costs have well outstripped the price farmers are receiving for their milk," Mr Creed said.
He called on the Government to legislate against unfair trading practices, review existing market support measures and tackle input costs that are under its control.