Dairy and tillage incomes experienced 'sharp increases' in 2022 but inflation 'eroded' real values
The Teagasc survey shows that dairy farm income increased to €150,884 on average in 2022, up 53% on 2021.
Dairy and tillage family farm incomes experienced "sharp increases" last year largely due to higher milk and cereal prices, however, the high rate of general inflation over the last 18 months "eroded" the real value of income across all farms.
Teagasc published the results of the 2022 National Farm Survey on Monday, which shows that while cattle and sheep farms also saw the value of output increase, the rise in production costs left incomes last year on many of these farms either lower or relatively unchanged on the previous year.
The Teagasc survey shows that dairy farm incomes increased to €150,884 on average in 2022, up 53% on 2021, or over €52,000.
There were sharply higher milk prices paid to farmers in 2022 - up 49% - and little change in milk production, partly due to high fertiliser and feed costs and also due to a dry summer that impeded grass growth.
Fuel prices were also up substantially, and, collectively this resulted in an increase in production costs, up 32% on average relative to 2021.
The average income on cattle-rearing farms in 2022 dropped by 13% to €9,408, and remains the lowest overall.
Young cattle prices improved in 2022, but production costs also increased by 13%, according to the survey.
General reductions across some key direct payments also impacted income levels on those farms.
Other cattle farms' incomes increased marginally in 2022, up 9% year-on-year to €18,811.
Prices for finished cattle improved in 2022, leading to an increased value of gross output increased.
However, the general rise in production costs was particularly felt on those farms and resulted in an average increase in costs of 31% year-on-year.
Sheep farm incomes had been on an upward trajectory in recent years, according to Teagasc, but in 2022, although output values remained relatively high, increased input costs - up 24% - squeezed margins and led to a sharp decline in average family farm income.
On average, income declined by 21% to €16,454.
Production conditions were favourable on tillage farms in 2022, with generally good yields, Teagasc said in its report.
Due to tighter international supply and demand conditions, Irish cereal prices increased by 40% relative to 2021.
Although input prices also increased, the 32% increase in input expenditure was offset by the improved value of outputs.
Overall, the increase in output prices and higher yields led to a 32% increase in family farm income to €76,654 on the average tillage farm in 2022.
Farm income varies by region, driven by farm system, scale, profitability and direct payments.
The survey shows that last year, the average family farm income was highest in the south-east at €79,863 and lowest in the west, where the average family farm income was more than five times smaller at €14,763.
Farms in Dublin and mid-east, mid-west and south-west also reported levels of income between €55,600 and €67,200 in 2022, reflective of the improved situation on dairy and tillage farms in 2020 and 2021.
The equivalent figure in the midlands was €44,026 and €20,930 in the border region.
The survey results published on Monday are representative of almost 85,806 farms in Ireland.
In 2022, several global events combined had a substantial impact on international agriculture, Teagasc commented.
There were sharp movements in global commodity prices including agricultural outputs, energy and agricultural inputs, with these price movements having a substantial influence on farm incomes.
A high rate of global inflation emerged in 2022 as the world recovered from the covid lockdown. Additionally, Russia’s illegal invasion of Ukraine particularly affected Europe’s energy market and also had an impact on the global supply of key grains and oilseeds.
This high rate of inflation has continued into 2023.
As a result, higher agricultural input prices, in particular for fertiliser, fuel, electricity and concentrates caused a sharp increase in farm production costs in all farm systems.
These events occurred alongside the more typical events which affect agricultural markets, such as variability in weather conditions.
Weather conditions in Ireland in 2022 were somewhat unfavourable for grass production over the summer period, but benefitted cereal crop production, leading to an overall increase in Irish cereal yields.
