Financial planning for every business is always a mixture of short-term tax efficiency and longer-term growth and investment planning. In farming, this planning is made significantly more challenging by the extreme volatility of farm incomes (see Table 1), a trend that has only become more prevalent in recent years.

A longer term look at any farm commodity shows how this volatility has increased.

Butter, for example traded between €2,500/t and €3,100/t from the turn of the millennium to 2006.

In the decade that followed, that trading range widened to between €2,300/t to €4,400/t. Since 2016, that range widened further to between €2,700/t to almost €8,000/t.

This change, and similar ones across other farm outputs, has made the good years much better and the bad years significantly worse.

At the same time, input costs have trended higher, with fuel, feed and energy all significantly increased on their 2000 levels.

There are some ways to counter this volatility, such as income averaging, but all of those come with trade-offs.

It is worth emphasising that it is essential to get independent financial advice when it comes to any tax or investment matter. Be sure that the person giving you the advice is a qualified financial advisor.

One other trend that has become increasingly prevalent over recent years which will have meaningful tax implications is the increase in the number of farmers who have an off-farm income.

Research published this week by Teagasc shows that between 2015 and 2024 the percentage of farms with an off-farm income has increased from 29.4% to 43.4%.

More than half of tillage and cattle finishing farms now have an off-farm income.

The outlier is dairy farming where only 10.6% of farms have an off-farm income, a reflection of the larger workload and higher earning potential in that system. Farms where there is an off-farm income and where on-farm profitability is higher than the long-term trend – as has been the case for cattle and sheep farming in the last couple of years – can find themselves landed with a higher-than-expected tax bill.

This is particularly the case where the combined on- and off-farm income can push the farmer into the higher income tax bracket.

As outlined on the previous page, the flexibility of personal pension plans can act as a pressure relief valve for some of this extra income.

But, once again, as every situation is different, get some professional financial advice before committing to any tax-saving plan. Finally, just a reminder to farmers who are subscribers to the Irish Farmers Journal that the cost of your subscription is a valid business expense and can be written off against your tax bill.