FIGURES RELEASED yesterday showed a 13.7 per cent drop in farm incomes last year and it was predicted this year will be even worse.
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 income 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.
“2007 was a bumper year for farmers, but events have caught up with them,” said Liam Connolly, head of the survey. “It looks like 2009 will be an even worse year.”
Commenting on the volatility of farm incomes that can be seen by the survey, Mr Connolly said that this is as a result of current EU agricultural policies that are less market-protective for farmers, such as the single farm payment scheme, which allows farmers to produce to market demand.
He added that, should low market prices lead to a fall in agricultural production, the EU may implement mechanisms to encourage an increase in the supply of dairy, cereals and meat.
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.
Full-time commercial farms also saw a notable change in revenue, with an average 14 per cent drop in incomes seen in 2008 compared to the previous year. The average income for such farms in 2008 was €37,590.
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.
Dr Cathal O’Donoghue, head of the Teagasc Rural Economy Research Centre, said: “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.”
Mr Connolly added that, even if repayments did not have to be made, the investments would have little effect on increasing incomes as they were primarily carried out to increase farmers’ convenience when carrying out their work.
“If you’re part time you have to have good facilities,” he said. “They wouldn’t survive without this investment.”
Incomes on part-time farms dropped by 5 per cent to €7,580, while just a quarter of all farms had an income of more than €25,000. Dairy farms saw the highest income levels (€45,732) but still suffered a reduction of 10 per cent from the previous year.
2008 also saw a reduction in the percentage of farms where the owner or his spouse had an off-farm job, with 56 per cent having one compared to 58 per cent in 2007.
Commenting on the survey results, Irish Farmers’ Association president Pádraig Walshe described them as “disastrous” and said, should current trends continue, farm incomes would fall by 30 per cent between 2007 and 2009. He called on the Government to take action to improve income levels and asked the banks that had provided loans to farmers to show them support at this time.
€16,993
The average farm income for 2008 compared with €19,687 for 2007
52%
The drop in income of tillage farmers in 2008, which fell to €19,380 from €40,611 in 2007
€2bn
The estimated amount spent on on-farm developments such as buildings and machinery