Higher costs and a sharp decline in returns on dairy and tillage farms are the main contributing factors to the decline in farmers’ incomes. Average family farm income, in real terms, has been lower in just one year out of the last 14 years.

Teagasc head of National Farm Survey, Liam Connolly said: “It was a particularly difficult year for tillage farmers, where incomes halved, and for specialist dairy farmers where incomes were down by 10 per cent. The income squeeze on dairy farms has continued into 2009. Incomes on drystock farms continue to be low and these farms are predominantly part-time and as expected virtually all have other sources of income.” The National Farm Survey revealed a 13.8 per cent increase in costs on farms, with the price of most farm inputs like feed, fertilizer, plant protection products and fuel all increasing. Overhead costs also increased last year.

In 2008, Irish farmers were more dependent on direct payments for their income. Subsidies now contribute 31 per cent of farm output and account for 103 per cent of average farm income, the highest percentage ever.

Other key highlights of the survey include:

• Average Family Farm Income (FFI) on full-time farms down 14 per cent to €37,590
• Average FFI on part-time farms dropped by 5 per cent to €7,580
• Incomes on specialist dairy farms down 10 per cent to €45,732
• Incomes on tillage farms halved to €19,380
• Average suckler farm income in 2008 was €7,700
• Sheep farms had an average income of €9,600
• Just a quarter of total farms had an FFI of over €25,000

Record on-farm investment

The highest ever investment in new farm facilities took place in 2008, encouraged by grant aid available under the Farm Waste Management Scheme, with a massive €2 billion invested in new buildings, machinery and other on-farm facilities. This came on top of a €1.4 billion investment in 2007 and brings the cumulative investment by Irish farmers in new facilities to €4.5 billion in the three-year period 2006 to 2008.

Head of the Head of Teagasc Rural Economy Research Centre, Dr Cathal O Donoghue said:” Nine out of ten dairy farmers invested new capital in their businesses last year, while half of cattle and sheep farmers have upgraded their facilities. The average gross investment per farm in 2008 was €19,480, equivalent to 115 per cent of the average farm income and the highest level recorded in the National Farm Survey series. These investments have led to an increase in farm borrowings in 2008, up by a total of €500 million on the previous year. The largest increase in borrowings took place on full-time specialist dairy units. Farmers investment decision over the last three years will continue to impact on income levels in future years, as loan repayments and depreciation contribute to the higher cost levels.”

Decline in off-farm employment

For the first time since the mid-1990s the percentage of farms where the holder and/or spouse had an off-farm job declined from 58 per cent in 2007 to 56 per cent in 2008. This obviously reflects the employment difficulties in the wider economy and is a worrying development given the proportion of part-time farmers in the sector and the importance of off-farm income to farm households.

In four out of 10 cases the off-farm job is held by the farmer, but National Farm Survey also shows the importance of other sources of income such as pensions and social assistance to family farm income. In overall terms, on eight out of 10 farms the farmer and/or spouse had some source of off-farm income be it from employment, pension or social-assistance.

Full-time farms suffer most

Individuals farming full time suffered the largest income drop last year. Farm incomes on full-time farms declined by 14 per cent in 2008 to €37,590 compared to €43,938 in the previous year. There were 32,800 full-time farms in Ireland in 2008 and they are mainly dairy, tillage and the larger drystock farms. Farm incomes on full-time farms ranged from €49,400 on full-time dairy farms to €19,410 per farm on suckler cow farms.

Teagasc National Farm Survey covers 1,102 farms representative of 104,800 farms nationally. Pig and poultry systems are not included. A full-time farm is defined as requiring at least 0.75 standard labour units to operate.