The Minister for Agriculture and Food, Mr Walsh, predicted "a substantial increase" in farm incomes this year when he presented his Department's Annual Review and Outlook yesterday.
Speaking in Portlaoise, the Minister said the signs available to him, including the recent good spell of weather, indicated that things were looking much better for farmers this year.
Pressed on his prediction, Mr Walsh said it was possible that farm incomes could increase to "double digits" following a number of bad years.
"However, many things can happen in farming. There could be bad weather, an oil crisis, wars in sensitive areas, but as of now things are looking much better than last year," he said.
Mr Walsh said that in recent times it seemed popular to minimise the contribution made by the agri-food sector to the Celtic Tiger economy. However, the sector now accounts for 10 per cent of GDP, 11.1 per cent of employment and 10 per cent of exports.
Because of its low import content, he said, it contributed 27 per cent to net foreign earnings, and agriculture remained more important to Ireland than to the other 13 member-states.
Average income from farming remained below the average industrial wage, but the latest information available on total household income indicated that farming activities provided only half of farm household income, with the rest coming from off-farm employment and State transfers.
Direct payments to farmers had risen considerably over the 1990s, he said, from £383 million in 1990 to £915 million last year.
The Minister said the average Irish farm size had risen to 29 hectares, just over 70 acres; this was the seventh largest in the EU and compared favourably with the EU average farm size of 18 hectares.
On Irish farms either the farmer or spouse now had an off-farm job, he said, a trend that was likely to continue.
He said over 45,000 Irish farmers had joined the Rural Environment Protection Scheme, the highest uptake in Europe, and nearly 10,000 farmers had opted to take early retirement under the EU schemes.