Fair Deal and succession - the biggest issues for Irish farmers

The Irish Farm Accounts Co-operative, or ifac as they are better known, launched its 2024 Irish farm report this week. This is the sixth year of ifac reporting on the mood among Irish farmers and is based on a survey of 1,048 farmers conducted over recent weeks.

The 2024 survey doesn’t exactly follow previous formats of a sector-by-sector analysis of mood.

The most striking finding is that just 66% of farmers are sure they will still be farming five years from now, a drop of 16% since 2021 when 82% said they would still be farming in five years.

Fair Deal and succession

As was the case last year, understanding the Fair Deal scheme for nursing home care remains an issue for nine out of every 10 farmers surveyed by ifac. Unlike many PAYE workers, farmers tend to have valuable agricultural assets. This could mean significantly larger payments will be required for nursing home care.

Alongside this, and somewhat related, is the farm succession issue. For almost all farmers surveyed, 94% said farm succession planning presents a significant challenge. Last year, 64% reported that they didn’t have a successor in place; in this year’s survey 48% don’t have a successor identified and half of all farmers surveyed haven’t made a will.

In terms of future planning, one area where there is an improvement this year compared with last year’s survey is in relation to pension provision.

In the 2024 survey, a still high one third, or 33%, of farmers don’t have a pension in place, but this is an improvement on the 40% that didn’t have a pension in place in last year’s survey.

Mood

As for the overall mood of farmers, with 2023 being such a difficult year for weather and farmgate prices compared with the previous year, it is not surprising that the percentage of respondents with an overall positive outlook for farming has fallen to 46% this year, down from 56% last year. It also won’t come as a surprise to learn that 16% less farmers expect to be farming in five years time, compared with 2021.

Day-to-day issues

Looking at the day-to-day issues impacting Irish farmers, input prices are the biggest worry for farmers. In the survey, 66% reported that this was their biggest issue, which is less than the 75% in last year’s survey. This reflects that, for the moment, input costs are relatively stable – though at higher levels compared to two years ago, when the survey found that concern with input costs was broadly similar to what it is in the 2024 report.

Financial planning remains an issue with many farmers, with the report finding that 23% of respondents to the survey don’t prepare cashflows or budgets and, worryingly, one third (or 33%) don’t know if they have access to enough working capital to operate their farm business for the next six months.

Access to labour continues to be an issue on Irish farms, though the survey finds a marginal improvement this year, with 30% of survey respondents saying that they don’t have enough staff or cover, compared with 32% last year.

Using land to produce energy is widely seen as an option for farmers and an alternative to crops and keeping livestock. However, the survey identified that more than one in five farmers (21%) don’t know where to start when it comes to renewables.

Unlike previous years, the 2024 report doesn’t do a sector-by-sector analysis of mood among different types of farmers. Instead, it focuses on a series of topics related to the business side of farm management and makes use of case studies to address particular scenarios.

Succession planning

Succession is a recurring theme in these surveys and this year the report looks at managing different types of successors. A willing successor is perhaps the most straightforward succession scenario, or there can be multiple willing successors. The report uses the Dunphy family from Co Sligo as an example of how moving the farm business into a Limited Company structure brought the two sons into the business alongside their parents.

The other scenario is where there is no identifiable successor at all, or a reluctant successor where a family member may agree or be persuaded to agree to take the farm over, even though their career interest may be elsewhere. The survey found that 15% of respondents believed there was no interest from the next generation in taking over the farm and the fact that a further 25% struggle with the viability of the farm, offers one of the reasons why finding a successor in families isn’t always straightforward.

The report looks at the options for where there is no identifiable successor and identifies the pros and cons, with four options: partnerships, share farming, leasing the farm or selling it. Whatever form of succession is chosen, the importance of making wishes clear is essential and a section is dedicated to making a will.

Having young farmers is the prerequisite of farm succession and the survey identifies Cork as having the highest number of young farmers, with 14%, followed by Laois on 9% and Cavan on 7%. As well as guidance for young farmers on how to maximise support available, guidance is also provided for women-run agricultural businesses.

Managing money

Financial management may be one of the most important aspects of the farm business, but as the report shows, many farmers are reluctant to make this a priority. Guidance is given in the report on “mastering cashflow” and an example is taken from the volatile pig farming sector, to illustrate the importance of knowing where the farm stands in relation to having money to pay the bills.

While working capital is used for the day-to-day running expenses of the farm, capital investment, such as buildings, machinery or land purchases, usually involves loans. Understanding the different types of loans and interest rates is also covered in the 2024 report.

People

Accessing staff was identified in the survey as a major issue on Irish farms and as well as accessing staff, paying them in a way that is compliant with legislation is now more complex than handing over euro notes at the end of the week. Guidance is given on pension auto-enrolment, which is due to be introduced this year, and with family labour being key to the operation of many farms, the report also explains how to maximise benefits for full-time family farm workers.

Having identified that 21% of respondents hadn’t a clue about where to start when it comes to renewables, a feature on unlocking solar potential on Irish farms will attract attention. With solar accounting for 13.6% of Irish electricity demand in 2022, the tropical 20% net return on investment in solar will attract farmer interest.