Top performing farms make €600/ha more than average in 2018

A detailed new report by farmer accountancy firm ifac shows that the top 10% of farms made an average of €600/ha more income last year compared to the average farm.

The top 10% of dairy farm clients of ifac earned an average net income (profit excluding own labour costs, EU subsidies and interest repayments) of €1,895/ha in 2018, which is more than double the €804/ha income made by the average dairy farm.

The top 10% of beef farm clients of ifac earned an average net income of €475/ha before EU subsidies last year.

This compares to the average beef farm, which made a loss of €116/ha before EU subsidies.

The top 10% of sheep farm clients of ifac made a net income of €383/ha compared to a net loss of €150/ha on the average sheep farm.

Overall, ifac’s 2019 Irish Farm Report shows a sharp decline in incomes for its clients in 2018

In tillage, the top 10% of growers had a net income of €466/ha – almost double the income of the average tillage farmer at €252/ha.

Overall, ifac’s 2019 Irish Farm Report shows a sharp decline in incomes for its clients in 2018.

This was due to a combination of factors including lower farmgate prices, the spring fodder shortage and the subsequent summer drought, according to Philip O’Connor, head of farm support at ifac.

The report was compiled using data from almost 22,000 sets of accounts from dairy, beef, sheep, tillage and mixed farming enterprises. It also includes a survey of more than 2,000 farmers, which reveals 86% of Irish farmers do not have a clear succession plan in place. This farmer survey also indicates that almost two thirds (62%) of farmers over 65 years of age have no pension, or only one pension in the family. Almost a third (32%) of respondents do not have access to adequate broadband.

In 2018, the average income (excluding EU subsidies) for dairy farmer clients of ifac fell by 25% to €804/ha. This was due to a combination of lower milk prices and higher costs. Feed costs were the main variable in 2018, rising 30% for dairy farmers. The average turnover on dairy farms was just under €255,000 last year.

The average herd size for dairy farmer clients of ifac is 75 cows, while 16% of clients have more than 100 cows. The average farm size for dairy farmers was 67ha (166 acres) last year.

Interestingly, ifac has extrapolated the separate figures for the top 10% of its farmer clients

Despite the fall in profits, dairy farms continue to perform well financially, according to ifac, with most farms consistently generating positive returns.

Interestingly, ifac has extrapolated the separate figures for the top 10% of its farmer clients, which shows a big gap financially between the top performers and other dairy farmers.

The top 10% of ifac’s dairy farmer clients made an average income of €1,895/ha, while the average farm turnover from this group was just above €340,000.

The ability of the top 10% of dairy farmers to retain profits is excellent

Analysis by ifac shows that the output per hectare for the top 10% of its dairy farmer clients is greater than the average farm by 38%, while the cost per hectare on the top 10% of dairy farms is only 13% greater than the average farm.

This means the top performers are spending 25% less to produce a litre of milk.

“The ability of the top 10% of dairy farmers to retain profits is excellent,” said ifac’s Philip O’Connor. “The top 10% of dairy farmers are spending more per hectare than the average farm but they’re also making more money per hectare. Our data shows the top 10% of our dairy farmer clients consistently retain over 40% of their gross income,” he added.

The average debt on dairy farms was just over €116,000, while the average capital investment was just under €33,000 last year. Most debt on dairy farms is used for buying land or farm development.

For beef farmer clients of ifac, 2018 was a very difficult year, with the average farm running up a loss of €116/ha (excluding EU subsidies). Again this was driven by higher costs, mainly higher feed costs during the spring fodder crisis and summer drought. When EU subsidies are included, the average income for beef farmer clients of ifac stood at €364/ha. Without EU subsidies, more than 60% of beef farms are loss-making enterprises.

The average farm size of ifac’s beef farmer clients is 48ha

The average output, or turnover, for beef farmer clients of ifac has been very steady over recent years at around €43,000 despite volatile beef prices. The average farm size of ifac’s beef farmer clients is 48ha (119 acres).

More than half (52%) of ifac’s beef farmer clients are classified as part-time farmers, while 85% of all beef farm households have an off-farm income source.

Again, ifac has extrapolated figures for the best-performing beef farms which shows that the top 10% of beef farmers made a profit of €475/ha (excluding EU subsidies) last year. This was down 21% on 2017 levels when net income for the top 10% of ifac beef farmers stood just above €600/ha.

Similar to their dairy counterparts, these top beef farmers excel at cost control and pushing their output per hectare. The average debt on beef farms was €44,345 last year, while capital investment on beef farms remains quite low at just over €9,100. Indeed, the average dairy farmer is investing 150% more per hectare than their beef farmer counterpart.

Much like beef, profitability is weak among sheep farmer clients of ifac. Excluding EU subsidies, the average sheep farmer client of ifac made a loss of €150/ha last year.

This compares to an average loss of €126/ha on sheep farms in 2017.

The average output from sheep farms was slightly over €34,000 last year, while the average debt on sheep farms is €19,500.

There is a considerable gap between the top 10% of sheep farmers and other sheep farmer clients of ifac

Again, almost 85% of sheep farms have an off-farm income source.

There is a considerable gap between the top 10% of sheep farmers and other sheep farmer clients of ifac.

Output from the top 10% was more than €66,700 last year – almost double the €34,000 average.

The top 10% of sheep farmers are profitable without EU subsidies and made a net income of €383/ha last year, down from €406/ha in 2017.

In 2018, the net income on the average tillage farm client of ifac’s stood at €252/ha (excluding EU subsidies).

This is a sharp increase on the €51/ha income made in 2017 as a result of very weak grain prices.

The average debt on tillage farms is just over €88,000

With EU subsidies included, income on tillage farms stood at €581/ha for 2018. On the top 10% of tillage farms, net income was higher at €466/ha (excluding EU subsidies) and €795/ha including subsidies.

The average debt on tillage farms is just over €88,000, while the average capital investment stood at more than €36,600 last year.

Over a third (35%) of tillage farmer clients of ifac have no business debt at all. According to ifac, tillage farmers with 500 acres or more are typically very profitable year after year, despite shifting grain prices.