According to Teagasc, the average farm income in 2022 is forecast to decline by 19%.
In its Teagasc Outlook 2022, Economic Prospects for Agriculture publication, it outlined that the end outcome – which is “extremely uncertain” – would depend on several factors, including:
- The impact the coming winter has on silage stocks;
- Fertiliser market developments in the spring of 2022;
- Weather conditions that follow;
- The strategies farmers adopt in reaction to these external market circumstances.
In a statement on Tuesday, December 7th, 2021, Teagasc said:
“Significantly, higher production costs are forecast to be a feature across all sectors in 2022.”
“Output prices are unlikely to adjust to reflect the increase in production costs fully, and farm incomes in 2022 are, therefore, forecast to decline.
Irish farm output prices in most sectors were “quite high” in 2021. On the back of this, the state agency forecasts a “relatively small, positive” output price adjustments in 2022 for pigs and tillage, in the range of 2 to 3%.
It predicts that sheep prices will be down 5% on their recent high level.
As a result, it expects a “sharp” decline in grassland and tillage systems’ incomes.
2022 farm incomes
The report forecasts a 16% fall in the average dairy farm income in 2022.
To justify this outlook, Teagasc pointed to higher production costs, with just a 2% increase in milk production forecast.
The higher cereal yields of 2021 are “unlikely to repeat” in 2022. The report forecasts that the average tillage income will fall by almost 35%.
Also, it expects average incomes on sheep farms to decline by 14%. The state agency said this reflects somewhat lower sheep prices and higher production costs.
Furthermore, Teagasc outlined that average incomes will also fall on cattle farms in 2022. A decline of 31% is in prospect for cattle rearing farms with an 18% decrease for other cattle farms.
While pig prices should be higher in 2022, increased production costs will “cancel” the benefit, with margins to decline further.