Farm Incomes Increase Dependency on Single Payment and REPS

The national average Family Farm Income in 2006 declined by 25.7 % to €16,680, according to the National Farm Survey published today, Monday, 30 July.

This is down by €5,779 on the previous year, when direct subsidy payments were artificially high. Direct payments were down by €4,755 in 2006, but their importance to farmers’ income has actually increased and now account for 98% of Family Farm Income. When the figures for the two years are combined, Family Farm Income has increased by 7.2% from 2004 to 2006.

The Survey conducted by the Teagasc Rural Economy Research Centre showed that on full time farms, the average Family Farm Income was €34,486, down by 15% on the previous year. Full time farms represent the more commercial sector and account for one third of the farms represented in the survey. Dairy farms form 56% of full-time farms with tillage accounting for 8% and remaining 36% in the drystock systems. Just one fifth of farms generate an income from farming greater than €25,000, while just 12% of farms earn an income of over €40,000.

Since subsidies were decoupled from production the focus is now on market based returns. Dairy and tillage are the only categories of farms which, on average, are generating a net farm income from the market place. Liam Connolly, Head of the National Farm Survey team said that “it is clearly evident that market output for the drystock systems is not sufficient to cover production costs and that a major contribution of direct payments is needed to make up the shortfall.” However, he pointed out that on specialist dairy farms market income provided 48% of Family Farm Income in 2006, and provided 15% of FFI on specialist tillage farms.

The average Family Farm Income for all part time farms was €7,899 in 2006 down from €11,372 in 2005.

Overall costs on farms were down marginally, by 1.2% on average. Costs have declined for the third consecutive year on the mainly tillage farms.

Both direct and overhead costs on these tillage farms are down by 6% and 2% respectively. It was different story on specialist dairy farms where costs were up. Direct and overhead costs both increased by 8% and 6% respectively.

Farmers are continuing to invest in their farms. Average net new investment was estimated at €5,989 per farm in 2006, which is broadly similar to the previous year. This was equivalent to 36% of average income in 2006.

Off farm income continues to be important. On 82% of farms, the farmer and /or the spouse had some source of off farm income, either from employment or from pension or social assistance. On 58% of all farms, the farmer and or the spouse had an off farm job, compared to 55% in 2005.

Just under half of all farms surveyed were in the Rural Environment Protection Scheme and received REPS payment in 2006. These farms had a higher Family Farm Income that non REPS farms. In 2006 FFI on REPS farms was €17,713, 13% higher than the average income on non REPS farms. Over three quarters of the participants in this scheme are in the drystock sector. One interesting development this year is that income on specialist dairy farms participating in REPS is higher than on similar farms not in REPS.