The financial structure of the farming sector is sound, according to a new report published yesterday.
Research by Teagasc found the average debt on farms is €24,000, about half of the European average. The study concludes investment of €1.5bn would be required if milk output is to increase by 50% over the next five years as set out in the Food Harvest 2020 report.
Existing dairy farmers, who are expected to undertake the bulk of this investment, are urged to engage in rigorous financial planning to protect themselves in times of low milk prices.
Agriculture, Food and Marine Minister Simon Coveney, who launched the report, said agriculture is one of the cornerstones of the economic recovery.
He said the report shows that farmers have prudently managed their businesses over recent years.
This kind of sound management is no surprise. It can mitigate the worst impacts of price volatility and help to position farmers to invest to exploit the opportunities that will arise from the abolition of milk quotas, he said.
Teagasc economist Dr Fiona Thorne, one of the authors of the report, said larger dairy farms managed by farmers with higher family farm income and an off-farm income earned by the spouse are the most likely to invest.
Bank of Ireland director of business banking Mark Cunningham said the report highlights the significant investment requirement for the sector in the coming years.
© Irish Examiner Ltd. All rights reserved