After a record year for Family Farm Income in 2022, 2023 was a challenging year for farmers, according to the Annual Review and Outlook published by the Department of Agriculture, Food and the Marine (DAFM).
Fertiliser, feed and energy prices fell from their exceptional levels in 2022, but remained elevated compared to previous norms.
While farms adapted to challenging conditions, volatility from commodity markets and unusual weather patterns generated uncertainty. This combination of factors weighed on the sector’s profitability.
Continued high input costs, coupled with declining dairy and crop prices, significantly impacted livestock and tillage farmers.
Farm incomes from CSO
Data from numerous sources is analysed to outline developments in farm income and
structures, both at Irish and EU level, according to DAFM.
Data is sourced mainly from the Central Statistics Office (CSO), Teagasc, Central Bank and Eurostat. The data from these sources is used to generate an overview of farm income and farm structures in Ireland.
According to the CSO data, in 2023, the total estimated value for goods output at producer prices was €10.7 billion, down from €12.3 billion in 2022, a 13% decrease.
This comprised €4.6 billion for livestock, €3.6 billion for livestock products (mainly milk) and €2.5 billion for crops, including cereals, horticulture crops and plants, and forage plants such as silage and hay.
The value of milk output fell by 30% or €1.5 billion in 2023, driven mainly by prices for dairy products on the world market declining significantly.
Goods output at producer prices has grown at an average rate of close to 4%/yr since 2000, when it was valued at less than €4.9 billion.
The CSO data also shows that in 2023, intermediate consumption costs decreased by 1.6% .This is the value of all goods and services used as inputs in the production process, excluding fixed assets.
Input prices were rising since 2021, but due to the invasion of Ukraine by Russia in February 2022, input prices such as energy, fertiliser and animal feed increased at a much faster rate.
Feeding stuffs and fertilisers account for almost 40%, or €3.1 billion, of total intermediate consumption in 2023, down from €3.5 billion or 45% in 2022.
While spend on fertiliser rose by 75%% in 2022 compared to 2021, spend decreased by 33% or by €400 million in 2023.
Total spend on intermediate consumption in 2023 was €7.75 billion, down by €126.7 million on the 2022 spend of €7.88 billion.
The operating surplus was €2.9 billion, down 39% on the 2022 value of €4.8 billion. The operating surplus is an estimate of farm income before deductions for interest payments on borrowed capital, land annuities and rent paid by farmers to landowners for the use of their land.
This is the first year since 2018 that operating surplus has fallen.
Total subsidies, less taxes on products and production, provide a significant portion of operating surplus. In 2023, they were worth €1.64 billion, down from €1.95 billion in 2022, or 16%.
The pig exceptional payment scheme and fodder support scheme, along with the tillage incentive scheme, were introduced as measures that helped protect incomes in 2022 to support producers in the face of considerable challenges arising from the Russian invasion of Ukraine.
National Farm Survey results 2023
The Teagasc National Farm Survey (NFS) has been conducted on an annual basis since 1972.
The survey is operated as part of the Farm Accountancy Data Network (FADN) of the EU and fulfils Ireland’s statutory obligation to provide data on farm output, costs and income to the European Commission.
A random, nationally representative sample is selected annually, in conjunction with the CSO, to represent those farms with greater than €8,000 of Standard Output.
Each farm is assigned a weighting factor so that the results of the survey are representative of the national population of farms. These preliminary results are based on a sample of 793 farms, which represents almost 85,000 farms nationally or 64% of farms in Ireland.
Some data on ‘Mixed Livestock’ farms is also available, representing about 1.4% of the farm population. The mixed nature of Irish farms is reflected in the individual contribution of livestock and crop categories to gross output.
Family Farm Income (FFI) is calculated in the Teagasc National Farm Survey by deducting all farm costs (direct and overhead) from the value of farm gross output (including direct payments and subsidies).
Unpaid family labour is not included as a cost. FFI therefore represents the financial reward to all members of the family, who work on the farm, for their labour, management and investment.
It does not include income from non-farming sources and therefore may not be equated to household income.
The results for the 2023 NFS issued in July 2024 show that the average FFI for 2023 was €19,925, a 57% decrease on a record figure in 2022.
The average FFI increased each year for the past four years, by 89% between €24,213 in 2018 and €46,313 in 2022. However, this average was driven by very large increases in dairy and tillage farm FFI, with more modest increases in other farm types.
Similarly, the reduction in 2023 was largely associated with sharp reductions in income on these two systems, where FFI fell by 69% and 71% respectively year-on-year.
Elsewhere, farm incomes fell but the relative decreases were less dramatic – at 14%, 15% and 22% for cattle rearing, cattle other and sheep farms respectively on average.
Dairy FFI increased by 149% between 2018 and 2022 or by €94,248 to €157,591; however, 2023 saw this drop to its lowest level since 2012 at €49,432.
Tillage farm FFI increased by 77% from €41,589 in 2018 to €73,523 in 2022, falling back to its lowest level in many years at €21,399 in 2023.
However, on cattle and sheep farms the increase in FFI was more modest in recent years – with average increases closer to 20%.
The fall in FFI in these systems in 2023 surpassed the cumulative growth recorded previously, with FFI on cattle rearing, cattle other and sheep farms 11%, 2% and 6% below their 2018 levels respectively.
This translates to falls in average income in the region of €3,400 compared to 2022 on cattle other and sheep farms, with a decline of closer to €1,340 for cattle rearing.
Sharp falls in output prices for milk and grains were the main driver of the decrease in average FFI, a reverse of the drivers of the increase experienced during 2022, alongside lower production volumes.
In general, farms experienced continued elevated production costs, as key farm input prices for fuel, feed and fertiliser remained high, according to DAFM.
Most input costs peaked in late 2022 with prices stabilising and reducing somewhat soon after, however significant decreases were only seen in late 2023 for many inputs.
Further, high levels of rainfall had an adverse impact on tillage yields, grazing conditions and silage production, resulting in lower production volumes generally.
These factors combined to depress farm incomes, in spite of rising support payments to farmers in general.
Dairy system production costs rose by 30% in 2022 and remained at this record level in 2023.
Alongside significantly lower milk prices, down by 28%, this resulted in average dairy farm income of just under €50,000, a decrease of 69% following an increase of 53% in 2022, equivalent to a fall of over €105,000.
DAFM Review – direct payments
In 2023, direct payments accounted for 161% of sheep FFI and 231% of cattle rearing FFI. This indicates that on sheep and cattle rearing farms a portion of the monies received in direct payments was used as compensation for losses on farm output.
In contrast, €44 in every €100 of FFI on dairy farms was provided by direct payments. The high percentage of direct payments included in FFI on cattle and sheep farms ensures that even in lean years there will be a basic level of FFI, the review noted.
DAFM has stated that it is important to note that the figures presented in the NFS are in nominal terms.
An elevated rate of inflation was experienced during 2022 and 2023, with the Consumer Price Index growing by 6.3% and 7.8% in each year respectively in Ireland. As such, the purchasing power of farm income is lower than indicated by nominal figures relative to previous years.
The chart above shows average Family Farm Income by farm type in constant 2023 euro terms, where nominal values have been deflated using the Consumer Price Index. This shows the fall in income in 2023 is relatively greater in real terms.
Age and gender profile of farmers
According to the Census of Agriculture (CoA) 2020, more than half of farm holders were aged 55 or over. Farm holders over 65 years-of-age made up 33% of all farm holders in comparison to 26% in 2010.
In 2020, 25% of farm holders are in the 55-64 years-of-age group. Comparatively, CSO population distribution by age group estimates indicate that 14.4% of the population were 65 years and over in 2020.
The number of young farmers under 35-years-old was 7% in 2020, up slightly on the 2010 figure of 6%. The average age of farm holders has increased over the past 30 years.
In the 1991 agriculture census, the average age of Irish farmers was 51.9 years-of-age. It dropped in the year 2000 to 51, before rising again in the next two census of agriculture to reach 57.2 years in 2020, up 5.3 years over those 29 years.
The median age, or the middle value when data is ordered from least to greatest, is similar to the average age rising from 52 years in 1991 to 57 in 2020, the DAFM review outlined.
By comparison, the 2022 Census of Population shows that the average age in Ireland was 38.8 years; between 2011 and 2022, the average age increased by 2.7 years and since 2002, it has increased by 3.7 years.
Between 1991 and 2020, the proportion of male farmers fell from 90% to 87% of all farm holders, reflecting the growing proportion of female farm holders relative to 30 years ago.
However, while in 2020, 13.4% of farm holders were female, there was significant differences in the percentage of female farm holders depending on the region of the country.
Women account for a higher share of farm workers across all regions as compared to their share of agricultural holdings.