Stephen Cadogan: It’s jobs away from the land that keep many farms going

The importance of the Government’s aim to increase sustainable employment across all sectors of the economy and in every town and village is self-evident.

Jobs will be needed to cater for an increase of around 25% in student numbers until approximately 2028, through demographic growth.

A less obvious but significant priority in provision of jobs is to provide jobs to generate the off-farm income which is critical for safe-guarding the economic well-being of a large proportion of farm households.

Nationally, almost one in three farm households rely on off-farm income to sustain both the household and the farm business.

This reliance on off-farm income is particularly pronounced for dry stock farms.

Teagasc has brought this into the limelight with its viability analysis based on its National Farm Survey results.

The analysis indicates that 37% of farms were economically viable in 2015; a further 29% of farm households were sustainable because of the presence of off-farm income, while the remaining 34% are economically vulnerable.

What “economically viable” means is that family farm income is sufficient to remunerate family labour at the minimum agricultural wage of €19,167, and provide a 5% return on the capital invested in non-land assets such as machinery and livestock.

That’s the happy situation on 37% of farms.

But it’s only dairy farmers who can generally earn enough from farming alone.

That’s why more than 80% of dairy farm businesses in 2014 and 76% in 2015 were considered economically viable by Teagasc.

The figure is likely to have fallen further in 2016, due to the continuing fall in milk prices.

There are 29% of farms which cannot reach the €19,167 and 5% return on investment targets; they are classed as economically sustainable only off-farm income earned by the farmer or the spouse lifts them over the viability threshold.

But, where the farm business is not producing a sufficient profit to sustain itself, and where neither the farmer nor the spouse works off the farm, the family falls into the difficult economic position of being “economically vulnerable”.

That was the plight of one farm in three in 2015,the number having grown since off-farm employment started falling in 2006.

It dipped under 50% in 2012, compared to 60% of farmers or spouses benefiting from off-farm work in 2006. Thankfully, there have been signs of recovery since 2013 in off-farm employment rates, albeit at a slow pace.

The impact of the economic recovery in the wider economy is more apparent in some regions than others. For example, employment rates have started to recover in the south and mid-east, but seems to be stagnating in some other regions.

Off-farm employment rates are highest in the west, but have also declined very rapidly in that region.

The Teagasc analysis gives the bare figures on the interesting relationship between farming and off-farm jobs.

It’s a complex relationship.

After all, the Basic Payment System provides money for farmers if they do no more than keep their land in good condition.

Many farms are too small to generate a living wage.

And farm development is very expensive.

Introduce an off-farm job into this mix, and the farmer has enough money to stay on the farm, and is earning money which can be invested in farm development.

Cattle-rearing depends heavily on income earned outside of the farm.

Only one in five cattle-rearing farm businesses are producing a profit sufficient to reward the labour and capital invested, despite 2015 being a relatively good year for cattle prices.

In other words, it was jobs away from farms that more than anything else were behind the vast majority of the 640,000 cattle which were processed by the Irish beef industry in 2015.

That’s why rural jobs — and workers willing to invest their wages in cattle, and give up their spare time, are so important.


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