Teagasc Survey Shows Some Recovery in Farm Incomes in 2000

Issued 3^rdOctober 2001

The Teagasc National Farm Survey for 2000 has shown a recovery in farm incomes.

Average farm income, at £11,500, was up by 27% on 1999.

The income rise follows a drop of 19% since 1995. Incomes in 2000 have now recovered to around the levels achieved by farmers in 1995.

The improved position was due mainly to higher output from the cattle sector resulting from higher prices plus increased direct payments.

Overall farm output increased by 12% in 2000 while farm production costs increased by just 5%. Direct payments to farmers increased by 16%.

The survey is based on an analysis of accounts on a representative sample of 1100 farms and provides details of incomes on a wide range of farm sizes and farming systems. The total number of farmers represented by the survey is 124,000.

The survey shows that just under 40% of farmers, or a total of 47,000, had an income from farming of more than £10,000 in 2000. There were 11.000 with incomes in excess of £30,000 and a further 11,000 between £20,000 and £30,000. Over 70% of farmers with incomes in excess of £20,000 were involved in dairy farming.

While almost 50,000 farmers had an income from farming of less than £5,000, the vast bulk of these had other sources of income in the form of an off-farm job, social welfare or pension.

According to the survey, there was an estimated 37,000 full-time farms where the farmer had no off-farm job. The average income on these farms in 2000 was £22,600, an increase of just over 20% on 1999.

Direct payments

While direct payments to farmers increased by 16%, their overall contribution to farm income declined from 74% in 1999 to 68% in 2000. In cattle and sheep farming, direct payments accounted for over 100% of income. In other words, returns from the market place were less than costs of production.

Direct payments made a lower contribution to incomes on tillage and dairy farms, accounting for 74% and 20%, respectively, of total farm income. As in previous years, payments under the Rural Environment Protection Scheme (REPS) had a considerable impact on incomes from cattle and sheep farming.

Farming systems

Tillage overtook dairying as the highest income earner in 2000. Average income on tillage farms was £23,700, an increase of over 43 per cent on 1999, reflecting the record yields achieved in the 2000 harvest. The value of tillage outout was up by 28% and direct payments increased by 15%.
Average income on dairy farms was £22,000, an increase of 20%, due mainly to increased output from milk plus a 19% increase in direct payments.
Sheep incomes increased by 24% to an average of £7,431 per farm, due mainly to higher lamb prices
Beef farming was again the lowest income earner, with average incomes of £6,000. These were over 40% higher than the 1999 income levels, due mainly to increased cattle prices and a return to a full level of direct payments..

Off-farm income

On 45% of all farms, the farmer and/or spouse had an off-farm job. This showed no change since 1999. On 33% of farms, the job was held by the farmer, an increase of one percentage point on 1999. Farmers with off-farm employment are predominantly involved in cattle and sheep farming.

When other sources of income, such as pensions and social welfare, are included, the survey shows that just 29% of farmers are now relying on farming as their sole source of income.

The report also contains estimates on the level of off-farm income. Information was provided by two-thirds of the farms where the farmer had an off-farm job. This showed that the average off-farm income in 2000 was £15,200. The corresponding income from farming on these farms was £8,000, giving a combined income of £23,200.

The authors stress that these off-farm income estimates should be treated with caution as the underlying data are not always sufficiently robust and the data was received without documentary verification. The data should therefore be regarded as indicative of relative levels rather than as accurate absolute levels.

New investment

New investment in farming increased for the first time since 1997 - from £313 million in 1999 to £418 million in 2000. Average net new investment on farms in 2000 was equivalent to 29% of farm income. Dairying accounted for 64% of total new investment with tillage accounting for a further 11%.

Click here for the full text of the Teagasc National Farm Survey for 2000.