Farm incomes rise despite volatility

Farm profitability levels rose in 2021 but all eyes are on rising costs and market volatility, says head of Agri Sector at Bank of Ireland Eoin Lowry.

Grain markets strong but volatile

While grain markets continue at record highs they have shown some weakness in recent weeks given the potential for safe corridors to open up for grain exports from the Ukraine. Prices locally remain unchanged with quotes of €340/t for green wheat and €325/t for green barley at harvest.

These prices are €120/t higher than harvest prices this time last year (Irish Farmers Journal). Given that crop inputs have risen significantly, costs could be up €50-70 per tonne of grain this year.

“The average family farm income rose by 26% in Ireland in 2021 to just over €34,300. Average dairy farm incomes rose 23% to €97,000. Average tillage farm incomes rose 77% to €59,000”

Crops are in excellent condition thanks to dry and mild growing conditions. This is providing potential for high quality and high yields at harvest. Weather conditions will be the key factor in the coming weeks. Straw prices look set to equal last year.

Milk production to decline

Irish milk production is forecast to decline by 1% or 100m litres in 2022, the first time supply volumes have declined since the removal of milk quotas.

According to the CSO, domestic milk intake in April was down by 1% compared to April 2021.

The drop in supply is mainly as a result of poorer weather impacting grass quality and hence milk yields per cow. This has seen two dairy processors (Glanbia and Strathroy) lift supply curbs on milk during peak supply months. In the case of Glanbia it is only lifting the restrictions for 2022 and 2023.

Milk prices continue their bull run with prices for May pushing over 50c/l in many processors- a lift of 2c/l on April supplies in many cases. The outlook for milk prices over the remainder of the year looks set to remain strong with limited supply growth but will depend on demand remaining high.

€100/ha fodder support scheme opens to farmers

Given the high cost of feed and fertiliser, the Department of Agriculture has launched a new Fodder Support Scheme which will pay farmers €100/ha (€40/acre) to make hay or silage.

The scheme is open until 2nd August 2022. The payment rate can be applied to a maximum of 10ha with the maximum potential payment of up to €1,000. The scheme is not open to dairy farmers (Department of Agriculture, Fodder Support Scheme).

Farm incomes surge in 2021

There was an overall increase in average farm profitability levels in 2021, according to the Teagasc National Farm Survey 2021.

The average family farm income rose by 26% in Ireland in 2021 to just over €34,300. Average dairy farm incomes rose 23% to €97,000. Average tillage farm incomes rose 77% to €59,000.

Average cattle rearing incomes rose 30% to €10,900. In general farms experienced an increase in production costs, as key farm input prices for fuel, feed and fertiliser all rose in 2021.

However output prices rose also, with prices for grain up over 30%, milk prices up 13%, cattle prices up 12% (Teagasc National Farm survey 2021).

Sector Developments & Insights June 2022
Eoin Lowry
Eoin Lowry is head of Agriculture at Bank of Ireland.