Milk price hit but farm income increases

Strong cattle prices boosted farm income in 2015 but there was a big fall in milk price, according to the Teagasc National Farm Survey.

The preliminary estimates, published yesterday, show family farm income increased by 6% in 2015, bringing the average figure to €26,526.

According to the report, there was a 6% increase in average farm income, despite the considerable milk price fall.

Teagasc attributed the income rise to increased milk production, combined with higher cattle prices, good weather, and reduced input expenditure due to lower fuel and animal feed prices.

The annual survey gathers financial data from over 1,000 farms, representative of more than 100,000 farmers, and provides a detailed analysis of family farm income for different enterprise groups.

Milk price was down almost 20% in 2015, but income on dairy farms fell just 4% to an average of €63,020. The EU milk quota system, which had been in place for 31 years, was removed in April.

The results show considerable efficiency gains on dairy farms last year, with input expenditure declining despite the output increase.

Almost one in three dairy farms increased milk production by 20% or more, with one fifth choosing to reduce levels.

“The lower milk price in 2015 meant that dairy farmers had to increase their milk output by at least 20% to just maintain their income at the 2014 level,” said Dr Thia Hennessy, the Teagasc survey head.

Cattle prices increased by between 6% and 16% depending on animal type. Combined with reduced input expenditure, it meant the average farm income on cattle farms increased in the order of 29% to 34%, depending on the production system.

The report notes while this magnitude of increase seems substantial, it should be borne in mind that average incomes were still quite low at just €12,904 on cattle rearing farms in 2015.

Teagasc’s Brian Moran said cattle farmers are still reliant on direct payments which comprise a large proportion of income.

“However, 2015 represents the first year in recent times where cattle farms generated a profit from production before they received these payments,” he said.

Lamb prices increased 2%, but incomes on sheep farms rose 8% to an average of €15,791 on the back of strong cattle prices and reduced input expenditure.

Despite a modest reduction in cereals value, income on tillage farms rose by 16% to an average of €33,731, mostly due to strong cattle prices and lower fuel prices.

The report reveals over €800m was invested by farmers in their businesses in 2015, with €300m of this invested in dairy farms.

Almost two thirds of farms have no business-related debt, with many choosing to fund new investment from working capital.

On the remaining one third of farms, the average debt level is €60,607 or 1.47 times the income level.

Farming continues to remain highly reliant on direct payments, according to the report. The average direct payment per farm was €17,000, comprising 64% of farm income in general and almost 100% on cattle and sheep farms.

The Irish Farmers Association president, Joe Healy, responding to the results, said the outcome for 2016 would be significantly worse as the farm income crisis deepens across sectors due to falling prices and poor weather conditions.