Farm incomes rose almost a third last year, an income spike likely to be short-lived with falling commodity prices, Teagasc has warned.
According to the Teagasc National Farm Survey 2011 the average farm income reached almost €25,000 last year while on more commercial full-time farms it was around €56,000.
While 15% of all farms have an income of around €50,000, one in five has an income of less than €5,000.
Average incomes on dairy farms increased by 38% last year to more than €69,000 but such income is expected to be hit by falling dairy product prices.
Last year dairy farmers benefited from a 15% increase in milk prices and the buoyant beef market improved calf prices.
Income on cattle-rearing farms increased by 50% on the back of strong beef prices, bringing the average income to almost €11,000.
However, Teagasc points out that despite the considerable improvement in income, there are still a large number of small, low income cattle farms that continue to be highly reliant on direct payments.
Lamb prices were also up last year and income on sheep farms increased to just over €17,000.
While grain markets remained favourable last year and output increased, this was offset by cost inflation, especially in fertiliser and energy, resulting in tillage farm incomes remaining relatively unchanged from the 2010 level.
Around one-third of tillage farms earned an income of less than €10,000, while 20% had an income of €50,000 or greater.
Despite the substantial increase in farm incomes last year only one third are considered economically viable, with about 33,000 farms considered to be in a financially vulnerable position.
Teagasc also found that farmers used last year’s favourable market conditions to repay debt. The debt figure of €1.8bn represents a reduction of 20% on the previous year.
Just over a third of all farms have a business-related debt, compared to 72% of dairy farms and more than 40% of tillage farms.
Teagasc found farmers continue to invest in agriculture, with new investment totalling €666m last year. President of the Irish Farmers’ Association John Bryan said the figures reflected the more positive price and income environment last year but that was changing.
He warned that increasing costs and falling product prices in some sectors this year were putting pressure on farm incomes.
Mr Bryan said the Common Agricultural Policy (CAP) was crucial in underpinning the primary agriculture sector, through direct payments and the rural development programme. He said the CAP supported the family farm structure and provided some cushioning against price and cost volatility. Mr Bryan said it was crucial that Ireland’s funding envelope was fully maintained in the CAP after 2013.
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