Irish farm incomes will rise by a modest 3% in 2021, with higher farmgate prices offsetting a rise in input costs, according to a new report from Teagasc's economists.
It is a marked difference from a Teagasc forecast at the end of 2020 which predicted an 18% drop in farm incomes in the absence of a Brexit trade deal.
The so called EU-UK Trade and Co-operation Agreement (TCA), which emerged on Christmas Eve last year ended the prospect of a worst case impact on trade between the EU and UK and a €490m income hit for Irish farms.
The new forecast is for family farm income to increase to an average of about €25,600 in 2021, assuming that COVID-19 does not lead to any further significant market disruption.
Prices are projected to increase marginally for milk, while prices are set to rise about 4% in the cases of cattle and lambs.
Pig prices are set to fall by 10% as a result of reduced demand for EU pigmeat exports. International prices for cereals at harvest 2021 are expected to be slightly lower than 2020 harvest prices overall, due to increases in supply.
In terms of farm inputs, there are a few cost pressures emerging in 2021, notably for fertiliser and to a lesser extent feed. Overall, costs of production are forecast to increase slightly.
Teagasc stated that income movements on dairy and cattle farms should be fairly limited in 2021.
Cattle finishing and suckler systems should see an increase in income of 3% to 6%, with higher production costs being offset by higher cattle prices.
On dairy farms, a marginal increase in milk prices, coupled with an increase in milk output should be sufficient to offset higher productions costs. Therefore, the average dairy farm income in 2021 is likely to be unchanged on the estimated 2020 level.
With Irish lamb prices expected to increase, the average sheep farm income is forecast to increase by 6% in 2021, with many sheep farms also forecast to benefit from price improvements for their secondary cattle enterprises.
Tillage farms should see a significant improvement in farm income in 2021. The main drivers of this increase will be a higher level of cereal production, additional income from secondary beef enterprises present on many of these farms and a pilot straw chopping scheme.
Collectively these factors could be sufficient to increase tillage farm incomes by 17% in 2021.