Teagasc has published the results of its National Farm Survey for 2020.
Considering the income developments across the various farm systems, the average family farm income rose by 9% in Ireland in 2020 to €25,662.
According to the Teagasc National Farm Survey 2020, lower production costs and resilient food demand increased average farm income in 2020.
Covid-19 and lower farm input costs
Despite the COVID-19 pandemic, incomes across the various farm systems in Ireland either held or improved in 2020.
Results, published in the Teagasc National Farm Survey 2020, are representative of over 93,000 farms in Ireland.
Production costs were lower as key farm input prices fell in 2020.
It had been initially feared that COVID-19 would significantly damage food demand, particularly for beef, due to foodservice closure and lockdown measures in Ireland and in overseas markets.
However, this was effectively offset by growth in the consumption of food at home.
Brexit and weather
A Brexit trade deal was eventually agreed upon, but the protracted negotiations created additional uncertainty, impacting beef prices in particular.
In the spring of 2020, there was some significant, but ultimately short-term, disruption to the beef supply chain, which saw Irish finished cattle prices decline sharply.
As a result, supplementary support was provided by the national exchequer under the COVID-19 State Aid Temporary Framework to beef farmers who slaughtered cattle between February 1st and June 12th, 2020.
In spite of these challenges, farm output prices held firm overall in 2020. Teagasc highlighted a feared fall in farm incomes did not materialise, although some farm systems fared better than others.
Weather conditions in Ireland were generally favourable for grass production in 2020. On the other hand, difficult planting conditions negatively impacted Irish cereal crop production, leading to a decline in yields.
Global economic activity
COVID-19 led to a significant reduction in global economic activity in 2020.
“This had a major negative impact on crude oil and other energy prices, with knock-on consequences for fertiliser prices.”
“Feed prices were also lower in 2020. The fall in input prices benefitted farmers through a reduction in their production costs.”
“These cost reductions were sufficient to boost the average income in Irish agriculture in 2020.”
Beef, cereal, lamb and milk prices
Across the key outputs categories, lamb prices performed best, recording a 13% increase in 2020 compared with 2019.
Beef and dairy farmers benefitted from marginally higher cattle and milk prices in 2020. Cereal prices were up significantly in 2020, reflecting market supply and demand conditions.
Average farm incomes in Ireland
Lower dairy system production costs, coupled with a further increase in milk output volume and slightly higher milk prices, resulted in an average dairy farm income of €74,236 in 2020, increasing 13% on the 2019 level.
“The cattle rearing system, which comprises farms that are mainly specialised in suckler beef production, benefitted from marginally lower production costs in 2020.”
“However, the value of output and support payments were also down slightly in 2020. Overall, the average cattle Rearing income of €9,037 in 2020 was unchanged on the 2019 level.”
In the ‘cattle other’ system, which comprises mainly of beef finishing farms and enterprises selling store cattle, production costs also fell in 2020.
While support payments were also lower, the value of farm output increased.
In combination, this resulted in an average income of €14,813 in 2020 for the cattle other system, an increase of 8% on the 2019 level.
The sheep system also benefitted from lower production costs in 2020 and also experienced a strong increase in the value of farm output, which was driven by higher lamb prices.
In common with other drystock systems, on average the level of direct payments for sheep farm was down slightly.
The average income on sheep farms increased by 24% in 2020 relative to the 2019 level to €18,383 in 2020.
The tillage system experienced poor production conditions in 2020, which led to lower crop yields.
In line with other sectors, input prices for tillage farms decreased in 2020. However, there was also a significant increase in cereal prices in 2020, partially offsetting the impact of the drop in crop yields.
According to Teagasc, the average income on tillage farms fell by 1% in 2020 to €32,525.
“Taking account of the income developments across the various farm systems, the average family farm income rose by 9% in Ireland in 2020 to €25,662.”