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The latest estimates from the Department of Agriculture, Environment and Rural Affairs (DAERA) in Northern Ireland (NI) suggest that farm incomes will be up by 22% (21% in real terms) in 2016.
The analysis calculates a total income from farming (TIFF), which represents the return on a farmer’s own labour and capital invested.
The TIFF figure for 2016 is estimated at £244m (€284m), up from £199m (€231m) in 2015.
The confirmed TIFF figure for 2016 will not be known until later in the year, and it should be treated with some caution at this stage. The 2015 figure was originally estimated at £183m, but was later increased to £199m.
The main factor behind the improved estimate for 2016 is an increase in EU direct payments as a result of a more favourable euro to sterling exchange rate, which kicked-in after the UK vote to leave the EU last June. The estimated value of 2016 payments is £276m (converted at €1 = £0.85), up 18% from the figure for 2015 of £236m (converted at €1 = £0.73).
In 2016, the total gross output for agriculture in NI was unchanged at £1.76bn (€2.05bn), with dairying the largest sector, followed closely by beef and then poultry. Also contributing to improved estimates is a 2% reduction in the value of gross inputs mainly due to lower prices for fertiliser, fuel and oil. Animal feedstuff is the main cost, accounting for 53% of all inputs by value.
While the 2016 estimate might not be that reliable, it is still a useful barometer of the state of the NI industry at present, and highlights a significant fact – the projected income continues to be less than the total direct payments coming into NI farming. As shown in Figure 1, in four of the last seven years, the amount of money coming into NI by way of EU direct payments was greater than the final income actually realised.
By sector
To give an indication of how farmers in each of the sectors are performing, DAERA also analyses the accounts of 360 farm businesses each year. These businesses tend to be larger than the average in NI, and therefore more reliant on farming as the main income stream.
Farm business income measured across all these farm types is expected to increase from an average of £14,788 (€17,195) in 2015/16 to £18,943 (€22,026) in 2016/17, an increase of £4,155 (€4,831) or 28% per farm.
The increase is mainly coming from increased direct payments, but also improved producer prices, both being driven by the more favourable euro to sterling exchange rate.
However, there are significant differences in average incomes across the sectors. Traditionally, dairy farms have been the most profitable in NI, but incomes have been hit hard in the last two years.
As shown in Table 1, only the intensive sector (in this case ,pigs) has been consistently able to generate a return over and above EU direct payments in the last three years.
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