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Greatly Reduced Farm Incomes in 2018

The adverse weather that blighted agricultural production earlier this year has had

a significant negative impact on Irish farm income in 2018.

In their  Outlook 2019 report, Teagasc economists estimate that average farm income in 2018

fell by 15% relative to the record level in 2017.

Overall, average farm income in 2018 across the various production systems is estimated to have fallen by 15%.

The largest reductions are likely to have occurred on dairy farms, where the

average income reduction in 2018 is estimated to be 22%.

Farms that are highly stocked and operating on light soils, particularly those in the South East,

are likely to have been worst affected by the drought conditions.

Weather conditions in 2018 were extremely difficult. Grass growth

was well down on normal over the summer months

and there was a large drop in cereals yields for spring sown crops.

Total production costs increased in 2018 due to higher feed, fertiliser and fuel prices,

but the major driver was a dramatic increase in purchased feed volume for grassland systems

Milk producers experienced a 7 per cent drop in output prices in 2018,

with prices averaging 34 cents per litre.

In spite of the unfavourable weather, Irish milk production is estimated

to have expanded by a further 3 per cent in 2018.

 In 2018 lower milk prices, combined with the dramatic increase in feed expenditure,

resulted in a drop in average dairy net margin of 34 per cent to an estimated 9.8 cent per litre.

 Prices of finished cattle in 2018 were up marginally on the 2017 level.

Prices of weanlings in 2018 decreased by 3 per cent,

while prices of store cattle in 2018 decreased by 8 per cent relative to the 2017 level.

 In spite of stable output prices, the largely feed driven increase in production costs,

led to a fall in gross margins on the single suckling enterprise of 19 per cent in 2018.

Gross margins on the cattle finishing enterprise fell by 11 per cent in 2018.

 Due to the feed related increase in sheep production cost, the average sheep farm gross margin

is estimated to have decreased by 3 per cent in 2018.

 The receipt in 2018 of Sheep Welfare Scheme payments supports sheep enterprise margins.

 In 2018 Irish cereal yields for major crops were down about 20 per cent on the 2017 level.

Cereal prices at harvest in Ireland were up considerably on the 2017 level,

due to a lower domestic and international harvest.

Cereal direct costs increased slightly in 2018, due mainly to an increase in fertiliser and seed expenditure.

As a consequence of the poor harvest, cereal and straw prices were higher,

leading to an increase in cereal margins in 2018.

 Pig producers experienced a large reduction in pig prices of 13 per cent in 2018.

 An increase in pig feed prices led to higher pig production costs.

In combination, the fall in pig prices and rise in feed costs led

to a significant drop in margins from pig production in 2018.

Northern Ireland Farm Income Reduced by £107 million in 2018

These were the sad statistics from the Dept. of Agriculture, Environment and Rural Affairs (DAERA)

report outlining their first estimate for farm incomes in 2018.

Their report indicates that the ‘Total Income from Farming’ (TIFF) in Northern Ireland

fell by 23% (24% in real terms) from £467 million in 2017 to £360 million in 2018.

TIFF represents the return on own labour, management input and capital invested for all those

with an entrepreneurial involvement in farming. It represents farm income measured at the sector level.

Meanwhile, Total Gross Output for agriculture in the region was 1% higher at £2.13 billion in 2018.

There was a 2% increase in the value of output from the livestock sector,

while field crops rose by 3% and horticulture was 5% lower.

However, it should be noted that these figures represent the out-turn across two harvest years.

Dairy Sector

Dairying remains the largest contributor to the total value of Gross Output at £680 million in 2018; a rise of 3%.

Between 2017 and 2018, the annual average farm-gate milk price remained at 28.7p/L 

while the volume of raw milk produced in Northern Ireland increased by 3% to 2.3 billion litres.

Beef

The output value of cattle was 1% higher at £467 million in 2018.

The total number of animals slaughtered increased by 2% in 2018,

whereas, the average carcase weights for both clean and cull animals were 1% higher.

However, these increases in meat volumes and prices were mostly offset by reduced stock numbers.

Sheep

The value of output from sheep increased by 8% to £78 million in 2018.

The total number of sheep slaughtered fell by 2% in 2018 whereas the average carcass weight remained unchanged at 22kg.

This volume of sheep meat produced was 2% lower in 2018.

The average producer price increased by 7% to £4.26/kg.

Pigs, Eggs And Poultry

There were increases in the values of output in two of the three intensive livestock sectors during 2018,

with the poultry sector improving by 5% to £281 million and the egg sector growing by 3% to £107 million.

The value of pig output was reduced by 5% to £159 million.

All three sectors recorded an increase in production volumes, with eggs up by 7%,

poultry up by 4% and pigs up by 3% compared with 2017.

Producer prices in the eggs and pig sectors fell by 4% and 6% respectively,

whereas, the producer price for poultry increased by 1%.

Arable Sector

The total output value for field crops increased by 3% in 2018 to £66 million.

This was as a result of increases in the prices for barley, wheat and oats values across a calendar year reflect two harvests.

The value of potato output in 2018 fell by 9% to £21 million.

This was due to a lower area grown and lower yield in 2018.

The value of output for barley increased by 24% to £22 million

and the output value of wheat fell by 20% to £9 million.

The value of output recorded in the horticulture sector was lower year on year for 2018, at £107 million.

Mushrooms are the largest contributor to this sector in value terms, with an estimated output value of £51 million.

Support Payments

The estimated value of the 2018 direct subsidies (Basic, Greening and Young Farmer payments) was £286 million,

representing a decrease of 0.6% when compared with the 2017 payments.

The total value of Gross Inputs increased by 8% in 2018, to £1.58 billion. Feedstuff costs,

which accounted for 55% of the total Gross Input estimate, rose by 13% to £867 million in 2018.

Input Costs

Unsurprisingly, due to the wet end to 2017 and cold start to 2018, there was a 5% increase in the volume of feeds purchased.

However, the effect was multiplied with a 7% increase in the average price paid per tonne.

The total cost of fertilisers in 2018 fell by 1%. The 6% fall in the volume purchased was largely cancelled out by a 6% increase in the average price paid per tonne.

However, on a more positive note, there was a 13% rise in lime purchases,

so despite the difficult year, farmers were making more investment in soil health.

So the total amount spent on fertilisers and lime increased by 1% to £85 million.

Total machinery expenses increased by 5% to £156 million in 2018,

mainly due to a 10% increase in the cost of fuel and oils.