Teagasc released its National Farm Survey results last week. Essentially, it provides a retrospective review of the higher costs per sector associated with the weather events of 2018.

Again we got the annual reminders of the importance of direct payments to the drystock and suckler sectors, which are dependent on these payments for income. Interestingly, the level of off-farm income recorded has remained static for the last number of years.

The significant changes in some sectors are evident. While everyone is well aware of the dairy boom in cow numbers since 2015, the regional dairy analysis provides some insight into where milk is produced.

The majority of dairy farms – 72% – remain in the southern counties, which traditionally have been strong for dairy. The growth in the northern and western regions has not been as high as expected. This can be explained in part by the heavier soil structure and more fragmented nature of farms.

Farmers take on the long-term investment, the risk, little or no price guarantees and often for very little increase in return

If we take a look back to the National Farm Survey 2015 results, we actually see a small decrease in the average dairy family farm income compared to 2018 (€1,112/ha in 2015 v €1,049/ha in 2018). This is despite the fact that milk price was higher in 2018 (36c/l v 30c/l in 2015). Remember also that milk production has increased by up to 50% in the south and east where most of the dairy farms are.

So, what’s happening? Are dairy farmers running harder to stand still?

Variation in returns

The wide variation in returns per farm is stark. Over 75% of dairy farms have between 30 and 100 hectares. If we single out the cohort that are farming between 50 and 100 hectares, the average income is somewhere in the region of €60,000, but within that the range is from zero to €160,000.

What it does clearly show is that scale is never enough to deliver a sustainable income. Yes, 2018 was pretty exceptional from a feed cost perspective but nevertheless it happened.

Scale often brings hired labour, higher investment, higher variable costs, and higher debt.

2018 brought a timely reminder to many dairy operations that feed costs can be very substantial. Again, the report highlights that farmers take on the long-term investment, the risk, the workload, little or no output price guarantees and often all for very little increase in return.

However, let’s be clear: the dairy enterprise remains the golden child in terms of competitive returns for the resources deployed when comparing the agri sectors. Tillage is the only other sector which can provide a reasonable level of return for the work involved.

Debt increases

The survey also revealed details of average debt levels. Approximately 60% of dairy farmers have borrowings. The average debt per farm from this group is about €118,500, which equates to about €1,400 per cow if we take the average at 83 cows per farm (CSO).

Properly managed, Irish dairy businesses have the capacity to repay these average debt levels with ease.

Let’s be clear again: while debt is increasing, the levels of debt on Irish dairy farms pales into insignificance when compared to our international dairy comrades in the Netherlands and Denmark, where average debt is 10 times higher, closer to €14,000 per cow.

Needless to say, the international barometer is not the right measure. Indeed, we should be well aware of the fact that some new-entrant dairy farms in Ireland borrowed over €5,000 per cow starting off new businesses.

We regularly extol the virtues of increased national exports and premium branding, but in the same way we must consider the challenges faced by our family farms.

The fact remains that average dairy incomes have actually declined slightly when compared to 2015, which is another reminder that efficiency trumps scale every day of the week.

The apparent ending of the slide in tillage acreage is good news, not just for those in the tillage sector but for the agricultural sector as a whole.

While the provisional Basic Payment Scheme figures do not reflect any real swing to tillage following the higher prices of 2018, they do provide a level of relief that the area erosion appears to have ceased.

The tillage sector is an important provider of raw materials to many other sectors: such as grain for feed; barley for the drinks sector; oilseed rape for food oils; oats for food, feed and health; a number of native protein crops; a big range of vegetable and horticultural crops; and straw for the livestock and mushroom sectors.

Importance of being Irish

While equivalent raw materials can of course be imported, these cannot provide the authenticity of being Irish in origin.

This is becoming an increasingly important factor as the ever discerning consumer continues to probe the authenticity of all foods.

This is particularly critical for our exports and visions of a single enterprise Ireland significantly challenge the concept of our sustainability image from a marketing, biodiversity and climate perspective.

To survive and thrive, rural Ireland needs to have an agriculture industry with many strings to its bow.

Bord Bia’s Bloom really took hold of the public airwaves over the bank holiday weekend and reinforced the message about the quality food and produce grown on Irish farms. It is now firmly established as an excellent showcase for horticultural and indeed hardworking Irish food businesses.

Over 115,000 visitors, including 20,000 children, packed into the Phoenix Park last weekend. With 260 exhibitors, it is estimated that over €10m was spent at the festival. A key feature once again was the show gardens, of which there were 22, with an additional 14 postcard gardens and 28 nursery displays.

Over the five days, visitors voted on their top garden. The People’s Choice Award went to Memories are Made of This – Dementia: Understand Together, designed by Robert Moore. The concept depicted a garden of the 1950s, allowing people to step back in time with flowers of the era such as foxgloves, lupins and geraniums as well as old gardening tools. See more in Irish Country Living.

The majority of milk processors in the south pay for milk on a milk solids basis, sending a clear signal to farmers that more fat and protein is required rather than volume.

In Northern Ireland (NI), a volume-based payment system operates. This is a historical hangover from their relationship with the flatter supply curve in the UK. That historical model does not serve NI milk suppliers well.

Also this week, Aidan Brennan outlines the level of quality testing by various milk processors. Farmers work on a daily basis to have grassland, genetics and feeding optimised. It is only fair that processors should recognise this and match gold standard testing to better recognise the quality of milk produced.

There seems to be some confusion over what formula to use when converting camera images to a carcase score with new grading technology. Surely there is an objective, road-tested, EU conversion formula rather than create our own Irish formula to manage an Irish-made situation? There is also a huge opportunity for secure online recording and sharing of results. Our understanding was that better lighting and better cameras were going to increase accuracy of these machines – both of which should be implemented immediately. We have backed grading and the QPS grid in order to allow better differentiation of meat yield and conformation of cattle. The Department needs to clarify the formula situation immediately.