A new report prepared by economists from Teagasc and Wageningen Social and Economic Research for the European Parliament has found that farm incomes in the European Union (EU) have become increasingly volatile in recent years.

The report has also identified that existing support measures need to be better targeted in order to ensure farms are viable for the future.

The main focus of the study is the evolution of farm incomes over the past decade, with particular focus on the period from 2020 to 2024, when sharp increases in input costs, fluctuating output prices and high inflation put a squeeze on farmers.

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The report contains EU-wide data with specific case studies on Ireland, the Netherlands, Spain, Hungary and Poland and it evaluates how current policy supports work and areas for improvement to support farmers more effectively.

Main findings

Some of the main findings in the study include:

  • Increasing fertiliser, feed and energy costs from 2021 onwards put pressure on farm margins across the EU.
  • The study highlights Ireland’s farming sector’s strong exposure to global commodity markets, the significance of direct payments for beef and sheep farms and the increasing influence of environmental policy constraints on production decisions.
  • The report has found that risk-management tools such as insurance schemes, mutual funds and income stabilisation instruments could play a much bigger role in protecting farm incomes. However, uptake across the EU remains low.
  • Direct payments provide stability and predictability. However, the study has found that they are often not well targeted to those farms most in need. A large amount of support is still linked to farm size rather than to income vulnerability, environmental constraints or structural disadvantage.
  • The study confirms that income inequality within agriculture remains significant, with a relatively small proportion of farms generating a large share of total farm income.
  • More timely and detailed data is required for faster policy responses to sudden changes in market conditions.

    • The study also examines possible policy options for the future CAP with the conclusion that no one measure can fix all income challenges, rather a mix of supports is needed.

    Teagasc has listed some of the options recommended, including linking payments more closely to farmer need rather than farm size, expanding the use of risk-management tools, indexing payments to inflation to protect their real value, maintaining crisis reserve mechanisms for severe shocks and combining income support with measures that improve environmental performance and competitiveness.

    The findings are being presented to the members of the European Parliament at a briefing in Brussels on Thursday 19 March and come at a time when discussions on the future direction of CAP after 2027 are building.