Farm incomes were generally higher in 2019 thanks to a sharp reduction in the volume of feed used on livestock farms last year, according to new figures from farm accountancy firm ifac.

In 2018, the poor spring and summer drought resulted in a fodder shortage that forced most livestock farmers to significantly increase their annual spend on feed. By comparison, 2019 proved to be a much better year weather-wise, which allowed farmers to reduce spending on rations.

On the beef side, the reduced feed cost did see improved margins, but the average beef farmer continues to be loss-making

According to ifac’s 2020 Farm Report, the spend on feed on the average dairy farm dropped 20% last year to €785/ha, while the feed spend on the average beef farm dropped 6% to €263/ha.

This resulted in an 18% improvement in the net profit (excluding own labour costs, EU subsidies, interest repayments and depreciation) of the average dairy farm to €948/ha. On the beef side, the reduced feed cost did see improved margins, but the average beef farmer continues to be loss-making.

The report also includes a survey of more than 1,500 farmers, which reveals that 93% of farmers want to lower their carbon footprint

The 2020 Farm Report was compiled using data from just over 2,500 sets of accounts for 2019 from dairy, beef, sheep, tillage and mixed farming enterprises. The report also includes a survey of more than 1,500 farmers, which reveals that 93% of farmers want to lower their carbon footprint.

The survey also indicates that over 90% of farmers believe carbon taxes from farming should be ring-fenced for agriculture, while 73% of farmers want a farm-specific renewable energy scheme.

Dairy

Average incomes rise 18%

The average income (excluding own labour, EU subsidies and interest repayments) for dairy farmer clients of ifac rose by 18% last year to €948/ha. This was primarily down to a sharp fall in feed costs for 2019, which were down almost 40% from just over 10c/l in 2018 to an average feed cost of just 6.1c/l last year.

Although milk prices were back marginally in 2019 versus the prior year, the average cost per litre of milk produced was down 7%, which saw the average profit per litre improve for dairy farmers to 12.7c/l. Turnover for the average dairy farmer client of ifac last year was just shy of €250,000.

Turnover on the top 25% of dairy farms was just over €312,000 as farmers drove output

However, ifac’s data shows a big gap financially between the top-performing dairy farmers and the rest. The top 25% of dairy farmers made a net profit (excluding own labour, EU subsidies and interest repayments) of €1,735/ha last year, which is 83%, or almost €790/ha, more than the average. Turnover on the top 25% of dairy farms was just over €312,000 as farmers drove output.

The top 25% of our dairy farmer clients have higher costs for feed and fertiliser than the average

According to ifac’s head of farm support, Philip O’Connor, the big difference between the top 25% of dairy farmers and the rest is their ability to drive higher output while controlling costs.

“The top 25% of our dairy farmer clients have higher costs for feed and fertiliser than the average but they also have significantly higher output. It’s their ability to balance higher output while controlling costs that is leaving them with that higher net profit than the average,” said O’Connor.

The ifac report shows that borrowings on the average dairy farm rose 15% last year to just under €135,000, while capital investment on dairy farms (excluding buying land) was up 44% in 2019 to just under €48,000 on the average farm. Most of this capital investment was spent on new buildings and milk parlours.

Beef

Two-thirds of beef farmers are loss-making

The average beef farm made a net loss (excluding EU subsidies) of €101/ha last year, which is a slight improvement on the €116/ha net loss made in 2018. With the average beef farmer client of ifac’s farming just under 48ha, this means net losses of the average farm were just over €4,800 last year. The turnover on the average beef farm stood at just over €46,500.

Once EU subsidies are included, the average beef farm made a profit of €435/ha, which was up 18% on last year.

According to O’Connor, the support schemes like BEAM, BDGP and BEEP really helped beef farmers last year.

“Two-thirds (66%) of all our beef farmer clients are loss-making without EU subsidies, which just shows how important those support payments are to the sector.

“There was improved profitability for beef farmers last year because feed costs were down but the sector was better supported than previous years thanks to the new schemes like BEAM and BEEP,” said O’Connor.

The top 25% of beef farmer clients of ifac, who are likely to be commercial beef farmers finishing cattle, made a profit of €251/ha last year

Again, ifac has extrapolated figures for the financial performance of the top 25% of its beef farmer clients, which shows a major difference between the top and bottom. The top 25% of beef farmer clients of ifac, who are likely to be commercial beef farmers finishing cattle, made a profit of €251/ha last year. Including subsidies, these farmers made a net profit of €435/ha. Turnover was also considerably higher on these farms than the average at close to €75,000. Again, the top 25% of beef farmers are able to drive higher output than the average while controlling their costs to allow for a profit margin.

The average beef farmer has borrowings of less than €35,000, which is down 23% on the previous year. Just under half (43%) of beef farmer clients of ifac have no borrowings whatsoever.

Beef farmers invested an average of €13,000 in their farm last year, with most of this money spent on machinery. Buildings attracted the second highest amount of investment.

Sheep

Average sheep farm made a loss of €8,350 last year

The average sheep farm made a loss of €144/ha last year, excluding EU subsidies. With the average sheep farm 58ha in size, this means the average sheep farmer made a loss of €8,350. Once other income and EU supports are included, the average sheep farm made a profit of €337/ha.

Output from sheep farming is the lowest of any sector at just €37,642

Ifac’s analysis shows the top 25% of sheep farmers made a profit of just €71/ha without subsidies, while income for the top 25% rose to €528/ha once subsidies are included. Output from sheep farming is the lowest of any sector at just €37,642. Just like beef farming, this sector is totally reliant on EU supports for farmers to sustain a living.

Tillage

Average incomes crash 40% due to poor grain prices

The average tillage farmer in Ireland saw their income fall 40% last year to €153/ha due to weaker grain prices. Indeed, over half (52%) of tillage farmer clients of ifac made a loss last year before EU supports are included. Once EU supports are included, the average tillage farmer made a profit of €591/ha.

The top 25% of tillage farmers made a profit before subsidies of €374/ha, which translates to an average income of just under €50,000

However, there are major disparities between the top 25% of tillage farmers and the average. The top 25% of tillage farmers made a profit before subsidies of €374/ha, which translates to an average income of just under €50,000.

Once EU supports are included, these farmers saw their net profit in 2019 rise to €849/ha, or just over €106,000.

The average tillage farmer client of ifac’s has bank borrowings of just under €70,000, although a third of tillage farmers have no bank borrowings at all. The average tillage farmer invested €55,000 in their farm last year, with almost all of this (€50,000) spent on machinery.