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COVID-19 could cause 78% fall in beef farm incomes

The Agricultural Economics & Farm Surveys Department at Teagasc have assembled and published a new report, entitled ‘COVID-19 Initial Economic Assessment of its Impact on Irish Agriculture’.

The report looks at the possible outcomes of three scenarios that may occur in the beef industry as a result of COVID-19.

Those three scenarios are:

  • 10% output price reduction;
  • 15% output price reduction;
  • 20% output price reduction.

In each scenario, the volume of cattle marketed is progressively reduced. Teagasc stated that the scale of the year on year reduction is based on assumptions about the persistence of the negative shock to factory demand for animals observed in recent weeks.

Under scenario 1 (S1), they have assumed that output will fall by 4%. In scenario 2 (S2), output is predicted to fall by 7% and in scenario 3 (S3) the reduction of output is calculated to be 10% lower than 2019.

Direct cost of production will also rise as farmers hold on to their animals as a consequence of the negative shock to factory demand. For S1, costs will increase by 2.5%, in S2 it will increase by 3.5% and 4.5% in S4.

Lower fuel prices as a result of COVID-19 has been factored into all 3 scenarios at 4%.

Family Farm Income (FFI) for cattle rearing enterprises:

 

2018

2019

2020 (Pre-COVID)

2020 (COVID)

 

S1

S2

S3

Average FFI

€8,310

€9,198

€9,399

€5,689

€3,756

€2,085

 

 

Relative to 2019

Output price

-10%

-15%

-20%

Output volume

-4%

-7%

-10%

Direct costs

+2.5%

+3.5%

+4.5%

Overhead costs

-3%

-3%

-3%

 

Relative to 2020 (Pre-COVID)

Average FFI

-39%

-60%

-78%

 

Family Farm Income for cattle finishing farms:

 

2018

2019

2020 (Pre-COVID)

2020 (COVID)

 

S1

S2

S3

Average FFI

€14,560

€15,508

€15,117

€8,922

€6,360

€3,896

 

 

Relative to 2019

Output price

-10%

-15%

-20%

Output volume

-4%

-7%

-10%

Direct costs

+2.5%

+3.5%

+4.5%

Overhead costs

-3%

-3%

-3%

 

Relative to 2020 (Pre-COVID)

Average FFI

-41%

-58%

-74%

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