Teagasc Reports Mixed Fortunes for Farmers in 2003

9 December, 2003

Analysis by Teagasc of the performance of farming in 2003 shows mixed fortunes for farmers involved in the major enterprises.

Commenting on the CSO estimate of an increase of 2.2% in overall farm income this year, Teagasc economist, Liam Connolly, said that while beef and tillage farmers experienced some upturn in margins, dairy, sheep and pig producers all suffered a drop.

Mr Connolly, who was addressing the Teagasc Situation and Outlook in Agriculture conference in Dublin, said trends for 2004 pointed to a small decline in incomes due to declining output and rising costs.

The conference was presented with detailed analysis by Teagasc economists of the performance of the main enterprises in 2003 and prospects for 2004.

Further slippage in milk prices contributed to a decline of about 2% in margins from dairy farming, according to Teagasc economist, Billy Fingleton. This follows a drop of 20% in margins in 2002. He predicted that milk prices will fall by about 4% in 2004. While the introduction of EU compensatory payments will offset the price drop, a decline in calf prices combined with cost increases will result in continuing pressure on margins in dairy farming.

Liam Dunne told the conference that margins from beef increased by around 8% on average, due to a small reduction in costs and additional revenue from higher slaughterings and direct payments. The prospects for 2004 point to a drop in margins of around €100 per hectare (€40/acre), he said.

Tillage farmers experienced a substantial improvement on the very poor performance in 2002. Fiona Thorne that the margins for the two major cereal crops, spring barley and winter wheat, were up by 44% and 25% respectively on 2002. Increased yields and prices resulted in an increase in margins from sugar beet while lower prices led to a drop in margins from potato growing.

“The indications for 2004 are for some drop in margins from grain growing. However, this will depend greatly on weather conditions in the major international grain growing regions. The margins from sugar beet and potatoes are forecast to increase, primarily due to increases in yields,” said Fiona Thorne.

Teagasc Chief Pig Adviser, Michael Martin, told the conference that the past year brought further difficulty for pig producers. Lower prices and increased cost resulted in a decline of around 5% in margins. While overall prospects for pig prices in 2004 are reasonably good, escalating feed costs will severely curtail any increase in margins leading to a further difficult year.

Assessing the performance of the sheep sector, Liam Connolly said the 10 year cycle of decline in sheep numbers was arrested in 2004 with a small increase in the national breeding flock. Higher production costs and lower lamb prices led to a drop of around 5% in sheep margins last year. The prospects for 2004 are for a further decline in margins.

However, Liam Connolly pointed out that sheep return the second highest margin after dairying and are substantially ahead of margins from either beef or cereal growing.

Click here to download the full proceedings from the Situation and Outlook Conference.