Farm in­come down 18%: Teagasc es­ti­mate

Irish Examiner - Farming - - NEWS - Ea­monn Pitts (ea­mon­[email protected])

Farm in­come pes­simism was over­done this year, with this w e e k ’ s n e w e st i m a t e s f r o m Teagasc paint­ing a bet­ter than ex­pected pic­ture. Earn­ings were ex­pected to de­cline af­ter a spec­tac­u­lar year of growth in 2017, and 2018’s very late spring and sum­mer drought. There were es­ti­mates in the sum­mer and au­tumn that dairy farm in­comes might fall to nearly half their 2017 lev­els. In­stead, farm in­comes over­all are es­ti­mated to have de­clined by only 18%, and the dairy av­er­age is ex­pected to fall from €86,000 in 2017 to €67,000. Teagasc e c o n o m ic re­searchers this week re­vealed the fig­ures be­hind their 2018 in­come es­ti­mates.

Milk pro­duc­tion has in­creased by 3%, while cow num­bers in­creased by 3.5% this year. Pro­duc­tion costs in­creased 11% (in­clud­ing 33% higher con­cen­trate feed bills). And with milk prices down 7%, the re­duc­tion in dairy net profit mar­gins is put at 34%. Profit mar­gins in cat­tle farm­ing fell 10% from their al­ready low level. Costs in­creased by 8% (in­clud­ing feed costs ris­ing 31%) on cat­tle rear­ing farms, and by 12% on cat­tle fin­ish­ing farms. Steer prices rose 1%. The av­er­age in­come on cat­tle rear­ing farms is es­ti­mated at €10,200 for 2018, down 19% from 2017.

Teagasc economists say the sheep sec­tor had sim­i­lar chal­lenges to dairy and cat­tle, with in­put costs in­creas­ing 12%, in­clud­ing a 34% in­crease in con­cen­trate feed costs.

But sheep farm­ers en­joyed a 10% rise in sell­ing prices (up to the end of June). Over­all, that left sheep farm­ers’ in­comes this year falling only 1%. In­ci­den­tally, out­put from the sheep sec­tor has grown steadily for four years, and in­comes are now 60% higher than on cat­tle rear­ing farms.

Til­lage farms are the only main­stream sec­tor to have an in­crease in in­comes in 2018, ac­cord­ing to Teagasc.

This 6% in­come gain was achieved de­spite lower yields, par­tic­u­larly of spring bar­ley. The main con­trib­u­tor was a rise in grain and straw prices of 3040%, more than off­set­ting a 4.9% de­crease in the til­lage acreage, and a 20% de­crease in yields, which to­gether cut ce­real pro­duc­tion by 23%.

Pig farm­ers have had a very bad 2018. Prices fell 13.6% com­pared to 2017, while feed prices rose by 5.2%. The profit mar­gin over feed costs was as low as 33 cent per kg, com­pared with 59 cents in 2017. Over­all, 2018 farm in­comes are 10% higher than 2016 in­comes, ac­cord­ing to the Teagasc economists.

They also pre­dicted 2019 farm in­come trends, based on the as­sump­tion that some deal is done on Brexit. A favourable Brexit deal could see Ir­ish farm in­comes on av­er­age ris­ing by 15% in 2019, said Teagasc, in this week’s Out­look 2019 re­port. A dairy re­cov­ery is ex­pected, with av­er­age in­come ris­ing to €73,000, based on milk pro­duc­tion ris­ing 6%, milk prices falling 5%, and feed use falling 30%. In 2019, beef prices are pro­jected to gain 2%. And if ex­pen­di­ture on feed falls 20% from the high 2018 level, av­er­age in­come could re­cover 11%. Sheep farm­ing costs are also ex­pected to de­cline in 2019, and if prices don’t change, in­come could ad­vance 8%. How­ever the 2019 out­look for ce­re­als is not so pos­i­tive. Prices are ex­pected to de­cline by about 20%, be­cause of in­creased sup­ply com­ing from ad­di­tional plant­ing world­wide. And costs are ex­pected to in­crease. In­come on ce­real farms to de­cline from over €39,000 this year to be­low €36,000 in 2019, on av­er­age, is the Teagasc pre­dic­tion.

In 2019, pig prices are pre­dicted to in­crease by 7.8% over 2018 lev­els.

But if a hard Brexit arises, the 2019 farm in­come es­ti­mates may be over-op­ti­mistic.

The sec­tors hit hard­est by a hard Brexit are likely to be beef and forestry, be­cause so much of their out­put is ex­ported to Bri­tain.

A sec­tor which could profit from a hard Brexit is sheep farm­ing, which ex­ports mostly to con­ti­nen­tal Europe, and could re­place Bri­tish sup­plies in this mar­ket.

At the re­cent Ban­don Co-op dairy sem­i­nar, sup­pli­ers who were among 500 na­tion­ally get­ting Cellcheck Milk­ing For Qual­ity Awards for the low­est so­matic cell counts for the pre­vi­ous year’s sup­ply, from left, Ban­don Co-op chair­man Der­mot O’leary, Es­ther O’ma­hony, Vin­cent Mur­phy, Dan Su­grue , Car­bery CEO Ja­son Hawkins. At the back, An­drew Crow­ley, Ban­don Co-op CEO Ger Brick­ley, John O‘donoghue, John O‘sul­li­van, As­sis­tant CEO John Cof­fey, and Fin­barr Mul­li­gan, Lyons Es­tate, UCD. The co-op’s other Cellcheck win­ners are Aoib­hean O’rourke, Noel and Ann Jen­nings, Vanessa and David O‘con­nor, Martin Moyni­han, Adam Shorten, Gareth O’neill, and Clive Jen­nings.

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