Dairy farm incomes in the Republic soared to record levels last year as increased production and higher output prices outweighed a hike in input costs.
According to farming agency Teagasc, dairy farmers earned an average of €97,350 in 2021, an increase of 23 per cent or €18,300 on 2020 levels. Despite higher production costs, which rose by 11 per cent, a further increase in milk output volume and “significantly higher milk prices” benefited dairy incomes, Teagasc said.
Dairy has long been the most profitable segment of Irish farming. Since the lifting of EU milk quotas in 2015, the sector has ramped up production significantly but the increase has coincided with a major deterioration in water quality.
Teagasc’s latest annual farm survey suggested the average farm income in the Republic last year was €34,367, up 26 per cent on an annual basis. The average figure, however, includes many small, part-time beef and cattle farmers and is therefore low in comparison with the more profitable dairy and tillage sectors.
Higher output prices across most farm enterprises were the main driver of the increase in farm incomes in 2021, the agency said, while noting the scale of the increase in income varied considerably across farm systems.
In the “cattle other” system, which comprises mainly beef finishing farms but also includes farms selling store cattle, average income rose by 6 per cent to €16,416 while sheep farms saw incomes rise by 14 per cent to €20,500.
Due to higher fertiliser, feed and contracting charges, production costs on tillage farms increased by 34 per cent last year, a much larger percentage increase than those seen in the grassland systems, Teagasc said. However, the average income on tillage farms rose by 77 per cent to almost €59,000, primarily on account of “good production conditions”, which led to higher crop yields.
“Rising international agricultural commodity prices were a feature of 2021 and these price increases led to higher farm level output prices in Ireland,” it said.
While pig farm incomes are not reported in the Teagasc survey, separate data showed that incomes here fell due to higher feed prices and other increases in input costs, combined with a significant fall in pig prices.
Despite the increase in incomes, Teagasc said farms experienced a major hike in production costs last year as key farm input prices for fuel, feed and fertiliser all rose. This escalation in costs has since intensified in 2022, it said.
“As the global economy began to emerge from the slowdown caused by the Covid-19 pandemic, supply chains struggled to respond to increased demand, leading to sharp increases in crude oil and natural gas prices, with knock on increases in fertiliser, fuel and electricity prices as well as prices for a wide range of goods and services across the economy,” it said.
Separate data from the Central Statistics Office on Tuesday detailed a rapid increase in input costs in the 12 months to April. The most significant change was in the price of fertilisers which rose by 178 per cent. This trend of input price increase was also seen in energy and feed prices which were up 43 per cent and 27.3 per cent year-on-year in April.
