Listen: Lower milk and grain prices dragged down 2016 incomes

The biggest movement in farm incomes last year was on dairy and tillage farms. Incomes were broadly unchanged on sheep, suckler and cattle finishing farms. The outcome for the farm main enterprises was:

The above figures include direct EU payments. They do not include off-farm employment.

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The main drivers of change were the lower prices for milk and cereals. They pulled down gross farm output across all farms by 3%. Spending on inputs, particularly fertiliser, fell on all enterprises except on tillage farms.

Direct payments rose by 4%. That helped cattle farmers in particular. There were additional payments under Basic Payment Scheme, Beef Data and Genomics Programme and GLAS. The average total of direct payments was €17,932 and this accounted for an average 75% of income – see Figure 2.

The average farm size in 2016 was 47ha and average income per ha was €517. Figure 1 shows average size and income per ha for the different farm enterprises. Despite the drop in milk price, income per ha under dairying remained well ahead.

Debt

A large majority of farms (65%) have no farm business-related debt but this varies according to enterprise. Almost 60% of dairy farms had borrowings in 2016 compared with only 23% of sheep farms. The highest borrowings were on dairy, tillage and sheep farms – see Figure 3.

More milk at lower price

Milk prices fell 9% in 2016 but milk production rose by 5%. The result was that gross output per ha fell by 13%. Higher output was driven by average herd size rising from 68 to 72 cows.

Lower prices for feed and fertiliser were partially offset by higher veterinary and labour costs. Average gross margin on dairy farms in 2016 was €1,794/ha and this was 12% lower than in 2015.

Most of the drop in dairy incomes occurred on farms that have reduced deliveries since 2014 or expanded just moderately. Dairy farms that expanded by more than 50% since 2014 maintained a positive income situation for 2016.

Scheme payments help suckler farmers

Family farm income rose 2% on suckler farms thanks mainly to an 11% rise in EU direct payments. These came largely from GLAS and BDGP.

Prices for calves and young cattle fell by 10% in 2016. Overall costs were unchanged – increased spending on feed was countered by lower spending on overheads. The increase in 2016 income followed a 31% rise in 2015.

Average gross margin on these farms was €754 and this included a Basic Payment averaging €258.

Finisher prices down

Average farm income for cattle fatteners and finishers rose by 3% to €16,887. Prices for older cattle were down by 6%, cutting output. Total farm costs were up 2%, while spending on feed and fertiliser fell but spending on overheads rose by 4%.

The higher family income was due to EU direct payments which were up by 5%, mainly in the shape of BDGP and GLAS. Average gross margin was €905/ha and this included average Basic Payment of €328/ha.

Lamb prices slightly lower

Family farm incomes on sheep farms fell by a marginal 1% to €16,011. Lamb prices fell by 2% on 2015, while direct payments increased by 1%. Feed and veterinary costs rose as did overhead costs but spending on fertiliser fell. Overall, average farm costs fell by 2%.

Average gross margin on sheep farms was €621/ha and that included average Basic Payment of €242/ha.

Cereals take a hit

Average family farm income under tillage fell by 9% to €30,816. Cereal prices fell by 2% but yields fell by 10%. The average tillage farm also has a significant cattle enterprise and this was also affected by lower cattle prices.

Putting on the squeeze were costs, which rose by 4%. Spending on fertiliser rose – tillage farmers tended to buy before fertiliser price declined. Overhead costs rose by 4% due to higher spending on land improvement and land rental.

Average gross margin was €1,058/ha and this included average Basic Payment of €348/ha.

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Full coverage: National Farm Survey