Farm incomes increase 18% on higher milk and cereal prices

AVERAGE farm incomes increased by 18% last year, according to a Teagasc survey published yesterday.

But the survey, conducted annually by the Teagasc Rural Economy Research Centre, also revealed significant variations between sectors.

Higher milk and cereal prices were the main reasons for the increase in average farm incomes. But the incomes on cattle and sheep farms actually declined.

Irish Farmers Association president Padraig Walshe described the survey findings as no more than a flash in the pan. He said 2007 was the most favourable environment in the past 20 years. Already this year, input costs are up by 25% and processors are driving prices down. The two best performing sectors — milk and grain — have experienced significant price cuts.

Mr Walshe said the Teagasc figures confirm that average income for farmers even in a good year was less than half the average earnings in the public sector.

“Earnings by full-time farmers were completely inadequate to reward the investment in stock and machinery that is necessary to earn this figure,” he said.

The Teagasc report noted that the 18% increase, combined with a 26% decline in 2006 and a 44% increase in 2005 show the volatility of farm incomes after the decoupling of direct payments and phasing out of support mechanisms in 2005.

Direct payments remained static in 2007, averaging €16,346 and contributing 31% of farm output and 84% of average income.

The highest annual level of investment ever recorded on Irish farms occurred in 2007. Gross on-farm investment increased by a massive 76% and amounted to an estimated €1.4bn nationally.

Average gross investment on the farms that did invest in 2007 was €21,000, amounting to 80% of the farm income. Dairy farms accounted for almost half.

Liam Connolly, head of the National Farm Survey team said the two highlights of the 2007 results were the sizeable increase in dairy and tillage farmer’s incomes and the phenomenal on-farm investment at €1.4bn.

The largest increase occurred on the more commercial, full time farms. Incomes and output were much higher in 2007, averaging €43,900 compared to €34,500 in 2006 — an increase of 27%. There are 36,400 farmers in this group of key performers.

Direct payments were less important on full-time farms contributing 62% of income. Dairying and tillage continued to be the most profitable with average incomes of €51,017 on dairy and €40,611 on tillage.