Much Improved Incomes in 2022 for Most Farmers

The Agri sector employs 170,400 people, or 7.1%, of the total workforce on the island. This figure was 163,400 in 2020 so employment has increased by 4.3 % over the previous year. The proportion of farm holders under 35 has been falling since 1991 but there was an increase in the youngest age category between 2010 and 2020 (from 6.2 to 6.9 %.) 

 Despite increasing input costs (fertiliser, fuel, feed, and energy), farm gate prices of milk, beef, and cereals have been at record levels during 2022. This has given dairy farmers in particular an extremely profitable year. The annual Genfitt Knowledge Report compiled over July to September 2022 reported that there was significant confidence in the dairy sector -71% of respondents. Tillage was placed at 76%, whilst beef scored 74%.

The tight dairy market situation during 2022 contributed to a sharp rise in dairy product prices. Butter and SMP prices surpassed the €7,000 and €4,000 per tonne respectively for the first time ever in August 2022. Cheese prices have also risen sharply in recent months. Total milk production costs/litre in 2022 could be up by 35%, at around 36 cent/litre on average. However higher feed, fertiliser and fuel expenditure in 2022, were more than offset by higher milk prices.

In 2022 the average Irish dairy farm should see a net margin per hectare of over 22 cent/litre, an increase of 60%. This average net margin should translate into an average income in excess of €130,000, an increase of over 30% compared on 2021.

There are around 17,000 milk producers in the Republic and  over 3,200 in Northern Ireland (NI).The NI dairy herd expanding by just over 1,000 head to 318,372 cows as of June 2021. The average dairy cow yielded just over 7,900 litres, up from an average yield of 6,900 litres/cow in 2016.

This compares with an average less than  6,000 litres pa for the mainly spring calving  herds in the Republic. Dairy cows in NI receive over 2 tonnes of feed p.a compared with only one tonne per cow in the Republic. Average herd size in the Republic is 84 cows And 100 in NI.

According to Teagasc for 2022, Irish finished cattle prices were forecast to increase by 17% and weanling prices to increase by 8%. Store cattle prices were forecast to increase by 11% relative to 2021. For 2022 as a whole, Irish prime beef production was forecast to increase by 4% compared to 2021.

Average gross margin on cattle finishing farms was expected to increase by 10% while the average gross margin on single suckling enterprises in 2022 was forecast to fall by approx. 10%However total costs of production on single suckling and cattle finishing enterprises were forecast to increase by 23% and 29% respectively in 2022.

The world demand for lamb, driven mostly by China, is absorbing more of NZ and Australian output. Reduced British production and exports have reduced supplies to the EU market. EU demand for sheep meat is stable, with lower supplies reflected in higher prices.

Average Irish lamb prices for 2022 year to date were over 6% higher than in 2021, remaining well above the 5 year (2017-2021) average price levels. With higher prices and increased output volume, sheep output value was forecast to increase in 2022.

Total Irish lamb exports for the first eight months of 2022 were valued at €310 million, a 20% increase from the previous year. This was driven by higher average deadweight prices for the year to date combined with the sharp increase in sheep meat production in the first six months of the year. The EU is the most important market for Irish sheep meat exports, absorbing 74% of our exports in value terms with Britain accounting for a further 17% for year to date.

There was an overall increase in tillage area in 2022. Cereal area increased by 4.3%, winter oilseed rape increased by 45% and the total area of beans was 11.5% higher than 2021. The area of winter oilseed rape is estimated to have increased to 19,000 ha due to a combination of an early harvest, planting opportunities in late August and a strong market for oilseeds.

Farm gate cereal prices on offer for 2022 were at least 30 percent higher than 2021 while dry weather at harvest ensured that moisture bonus payment did positively impact prices. DAFM Basic Payment Scheme area data indicate that cereal area increased in 2022 by 3.8% compared to 2021.

Strong cash flows bolstered by low input costs are the order of the day in the Irish farming world, according to Eoin Lowry, head of Agri at Bank of Ireland (BOI). Farmers continue to deleverage as record agri commodity prices support strong profits and cash flows on farms.

In the 12-month period to the end of June 2022, the outstanding level of debt on Irish farms fell by €235m to €2.8bn – the lowest level in more than 10 years. Farmers are also borrowing less – in the 12 months to end of June 2022, new loans to farmers fell by 25%.

The Agri –Food sector has some 2,000 food production and beverage enterprises. The value of agri-food exports (90% of the food we produce).for 2021 was a record €15.4 billion-which was 51% up on 2012. We export food and beverage products to over 180 countries, our largest exports were dairy products, which exceeded €5 billion for the third year in a row.

On the input side, the increase in intermediate consumption was driven by a rise in feed costs of €273 m (18%) to €1.8 billion, an increase in energy and lubricants of €79 m (21%) to €456 m and an increase of €73 m (14%) to €606 m in the cost of fertilisers. Feed, energy and lubricants, along with fertilisers, accounted for 46% of the total costs of intermediate consumption in 2021. These areas of expenditure saw further significant cost increases in 2022. The cost of contract work, which represents about 7% of total intermediate consumption, increased by €33 m (8%) in 2021 to €464 million.