The largest farming organization in the country made a surplus (profit) of €2.04m in the year to the end of March 2014, significantly up on €0.33m for the previous 12 months. The profit increase came from a combination of reduced expenditure and increased income.

Income increased by 3% to €12.9m and was mainly driven by increases in European Involvement Fund (EIF) income (levies collected from each sector) and a marginal increase in members to reach a record of just over 88,000.

Membership income for the year was over €7m with combined EIF levies from all sectors of €4.7m. EIF levies increased by €0.5m in total, driven by price increases in most sectors. Higher dairy prices and greater volumes of beef in 2013 were highest performers.

Operational expenditure was down €1.2m to €11.5m for the year, mainly as a result of expenditure (€450k) on the Farm Centre and a revaluation of the Farm Centre asset (€800k) in the preceding year. These were once-off costs and the €11.5m is in line with prior years.

Staff costs are estimated to make up less than half of these costs, although the figure is not disclosed.

Other revenue included income from FBD Trust, the Agricultural Trust and the consolidated results of IFA Telecom Ltd.

Member services were set up 10 years ago and currently have over 70,000 customers.

According to IFA general secretary Pat Smith, it is performing well, stressing that its motivation is to offer services to farmers and rural people, while making a contribution to the day-to-day running of the organisation. Overall net assets grew by €5.3m to €19.4m.

In 1985, the IFA set up a special reserve fund and has invested almost €4m over the years in this fund. This investment fund has performed well and is now worth €16.4m – up 25% on last year. With a significant holding in FBD Plc, shares performed strongly during 2013 and were valued at over €18 at 31 March 2013.

Smith is confident that FBD remains a good investment due to its strong links with farming and its high dividend. He sees good long-term value, even though there will be some short-term volatility.

Comment

Overall, these are a strong set of results for the IFA. Costs are in line while commodity prices and output are driving income growth. But the IFA has also been a victim of volatility as its income fluctuates based on commodity price volatility. The strong balance sheet is aided by IFA Telecom but is heavily weighted towards investments in FBD. These have performed well in recent years, but given that FBD shares have fallen by almost 38% in the past 12 months, it is likely this will be reflected in a lower special reserve fund as on 31 March 2014.