The average farm income in Ireland was up 6% in 2015, Teagasc’s National Farm Survey found. The average income among the 85,000 farms profiled was €26,526.

While a 6% income increase looks decent, the National Farm Survey shows that farming is only providing a viable wage for a minority of farmers.

The facts are stark

Average farm income has barely moved in a decade – in 2005 it was €22,459. Farm income still lags way behind the average industrial wage and, further still, behind the average public sector wage.

Almost 40% of farms have an income of less than €10,000, with a further 22% between €10,000 to €20,000.

Lower costs

Lower costs played a big role in improving incomes, with the excellent grazing season a major factor.

Output was up by 3%, largely due to the increase in milk volumes – over 80% of dairy farmers upped their output. Direct payments dropped by 9% as the new CAP system, the BPS, kicked in. Smaller farmers not included in the survey would benefit from flattening, so not all this money is leaving farming.

The exit of the last farmers from REPS and the short year for the first year of GLAS saw payments from other schemes also decline.

Bleak warning for 2016

Incomes will not be sustained in 2016, Teagasc expects.

Economist Thia Hennessy said that the “dairy story was not good”, with average milk prices down 19% for the first quarter compared to last year.

“There may be signs the market is bottoming out, but any major price increase will come after the peak delivery months.”

She thus predicted a price drop for the year of 15%. Even a 10% increase in 2016 production won’t stave off a sharp income drop, Hennessy predicted – by as much as 25%.

Commenting on milk production this year, Teagasc director Gerry Boyle said: “I wouldn’t like to spread the message that more is better.”

“You would need to know your cost of production; if price is above production costs, then there is the chance to spread fixed costs through increased output.”

Similarly, the beef sector is under pressure. The year so far has seen prices fall by 5% and growth is down on last year. Costs are expected to rise as feed and fertiliser usage is up.

Hennessy also highlighted the uncertainty that the Brexit referendum has created around Anglo-Irish trade, with the beef sector particularly affected. A negative outcome there would hit prices and incomes.

Dairy

Dairy income, though slightly down, was still way ahead of typical returns from any other sector in 2015.

A 20% drop in milk price was negated by the increase in output as the shackles of the quota regime were finally released last April.

Gross output was down 4% to € 178,467. Of this, direct payments only accounted for € 20,201, less than one-third of income.

Beef

Cattle farmers almost broke even from the marketplace last year thanks to lower costs, due in part to an excellent grazing season and cheaper feed and diesel.

However, income from sales still does not cover costs, with farmers, on average, losing €200, leaving them utterly dependant on schemes and subsidies for their income.

Teagasc comment

Teagasc director Gerry Boyle highlighted the fact that the sector still has a very important economic relevance.

“I don’t think you can talk about beef profitability without looking at the processing side and the export side,” he said.

Highlighting the size of the sector’s contribution to the country’s economy, Gerry Boyle added: “There is profit but there may be an issue with distribution through the supply chain.”

Sheep

Sheep farms had a slightly better year, with incomes up 8%, to break the €15,000 mark for the first time in years.

Ironically, Teagasc is attributing much of the income increase to the cattle being carried on these farms.

Sheep farms are lowly stocked, with only about 1LU/ha compared to 1.29/LU on cattle non-rearing.

Cattle rearing farms, who also suffer form low incomes, have similarly low strocking rates.

Lamb prices increased by 2%, and ewe numbers were practically unchanged at about 130 on average.

Tillage

2015 was a better year on tillage farms, with costs down significantly. A 26% drop in spend on fuel helped drive costs down by 7% overall.

Direct payments were down by 12% as the effects of flattening under the new CAP take hold.

Teagasc highlight the 13% drop in rented land by the 5,000 tillage farms that were surveyed.

Basic Payment sector-by-sector breakdown

The National Farm Survey shows average BPS/ha as being highest on tillage farms, at €348/ha.

Sheep farms had the lowest payments at €229/ha on average. Cattle rearing farms were only slightly higher at €235/ha, with other cattle farms receiving €305/ha.

There was no comparable figure for dairy farms, but the figures did show a lesser reliance on direct payments.

Regional variation

The usual disparity in regional income was again apparent. This survey analyses rural disparity on the basis of income/ha. The southeast fares best at €783, more than twice the border/northwest region, which lags behind at €347/ha.

Methodology

The National Farm Survey (NFS) has been conducted by Teagasc annually for over 40 years. A random, nationally representative sample of farms are selected, weighted to reflect the national profile of farms. The pigs and poultry sectors are excluded due to the very small numbers involved. Small farms (those generating less than €8,000 of economic activity) are also excluded. In total, 84,259 farms are represented by the NFS. 794 farms were selected and interviewed for the 2015 preliminary estimates, published on Tuesday.