Department of Agriculture - Annual Review & OutlookAnnual Review and Outlook for 
   Agriculture, Food and the Marine 2019

Annual Review and
Outlook for

Agriculture, Food
and the Marine
2019

Chapter 2
Farm Income and Structures

overview-main-image

Aggregate farm income (operating surplus) decreased by

17%

to

€2,849

million in 2018.

The average farm size in the Teagasc National Farm Survey in 2018 was

43 hectares,

with average income per hectare coming in at €541

In 2018 average farm income for the 32% of farms classified as full-time was

€51,759

compared to

€10,141

for part-time farms.

2.1

Overview

This chapter analyses data from the Central Statistics Office (CSO) including the Farm Structure Survey 2016, Teagasc’s National Farm Survey 2018 (NFS) and Eurostat to show developments in farm income both in Ireland and at EU level. In addition, the impact of off-farm income and direct payments is also examined. The viability of Irish farms in considered using NFS results and the support schemes for farmers that are administered by the Department of Employment Affairs and Social Protection. Investment and borrowings in the agri-food sector are also examined, as are the age profile of farms and the role of women in agriculture.

2.2

National Farm Income (Operating Surplus), 2018

CSO Output Input and Income in Agriculture statistics show that aggregate farm income or operating surplus has risen over the past decade from a low of €1.5 billion in 2009 to a high of €3.4 billion in 2017. However, aggregate farm income (operating surplus) decreased by 17% to €2,849 million in 2018. This follows an increase of 30% in 2017 vs 2016 figures. The overall value of goods output increased in 2018 by 1.2%, or €96 million, to €8,182 million. Intermediate consumption increased by 13% over 2017, to €6,001 million.

The foremost reason for this change was an increase of €690 million (+13%) in intermediate consumption. The main items giving rise to this increase in intermediate consumption are feeding stuffs and fertilisers, which increased by €355.9 million (+27%) and €69.1 million (+13%) respectively. This increase was driven by unusual weather in 2018, namely a cold wet spring and a hot dry summer.

Net subsidies, which remained relatively stable over the past decade, decreased from an average of 90% of operating surplus between 2008 and 2012 to 59% in 2018. With the operating surplus increasing over the years and the value of subsidies remaining stable, the percentage contributed by subsidies to the operating surplus is decreasing slightly.

Figure 2.1 CSO Operating Surplus and Net Subsidies, 2008 - 2018

figure 2.1

Source: Central Statistics Office, Output, Input & Income in Agriculture Final Estimates 2018

Operating Surplus (OS)

Operating surplus is defined and calculated by the CSO by subtracting compensation of employees from farm income accruing from farm output. The figure is comprised of the operating surplus earned by farmers and that earned by agricultural contractors. It is an estimate of income before deductions for interest payments on borrowed capital, land annuities and rent paid by farmers to landowners for the use of their land. It does not include income from non-farming sources and may not be equated to household income.

The Economic Accounts for Agriculture (EAA) are EU wide accounts compiled by Eurostat.

The EAA analyse the production processes of the agricultural sector and the primary income generated by these activities. The agricultural sector, as described in the EAA, corresponds to Division 01 in NACE Rev. 1 “Agriculture, hunting and related service activities”.

The EAA measure the total output of the agricultural activity which includes:

Figure 2.2 shows the relative growth in income in agriculture per annual work unit in 2016, 2017 and 2018 relative to 2010 when the index for each country was set at 100. Real income per annual work unit has risen considerably in countries such as Bulgaria and Slovakia while income has fallen in Denmark and Malta in 2018 relative to 2010. However agricultural income in Denmark in 2017 was at 110 which is 10% above the 2010 income. In the case of Ireland income was highest in 2017 but has fallen back somewhat in 2018, although 2018 income is still above that of 2016.

Figure 2.2 EAA - Index of the real income of factors in agriculture per annual work unit, 2015 - 2018

figure 2.2

Source: Eurostat - Economic accounts for Agriculture

2.3

Agricultural Price Index

The agricultural output price index measure trends in the price of agricultural produce sold by farmers. The agricultural input price index is designed to measure trends in the price of farm inputs purchased for current consumption. Both input and the output indices for 2018 are slightly lower than that of 2014. In respect of inputs, fertiliser costs have dropped by 13 points, with smaller drops in the input price for motor fuels and seeds, while the cost of veterinary expenses has risen.

Significant decreases in respect of milk (-14.5), and pigs (-12.9) have contributed to the reduction in the overall output price for the sector, however crops have recorded an increase of 19.3 points over the same period.

Table 2.1 Agricultural Price Index Input Prices – 2016 to 2018

Table 2.1

Source: Central Statistics Office, Agricultural Price Index, January 2019

The output price index for agriculture was 106.5 in 2017, up from 95.1 the previous year, and this was reflected in the increase in the operating surplus. However, while the agricultural output price in 2018 remained strong, the cost of agricultural inputs increased significantly, which was reflected in the reduction in operating surplus in that year.

Figure 2.3 Agriculture Input & Output Prices, Yearly Analysis

figure 2.3

Source: Central Statistics Office, Agricultural Price Index, January 2019

2.4

National Farm Survey, 2018

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 Central Statistics Office (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 results are based on a sample of 897 farms which represents 92,720 farms nationally.

Farms are assigned to six farm systems on the basis of farm gross output, as calculated on a standard output basis. Standard output measures are applied to each animal and crop output on the farm and only farms with a standard output of €8,000 or more, the equivalent of 4 dairy cows, 5 hectares of wheat or 11 suckler cows, are included in the sample. Farms are then classified as one of the six farm systems on the basis of the main outputs of the farm. Farms falling into the Pigs and Poultry System are not included in the survey, due to the inability to obtain a representative sample of these systems. Due to the small number of farms falling into the Mixed Livestock system these farms are not reported here. Farms below the €8,000 standard output threshold are not included in the annual survey sampling frame but data is collected on those through the Teagasc Small Farms Survey, the most recent of which was conducted in 2015.

aerial-view-countryside

Teagasc Methodology update:

A change in the methodology utilised by Teagasc has resulted in the publishing of updated 2017 Population Weights and Standard Output Values.

This change in methodology results from the structural change that has occurred on farms since the previous Farm Structure Surveys (FSS) (2013). The 2016 CSO FSS estimated the farming population falling within the sampling frame of the Teagasc NFS to be 92,720. In response to this change Teagasc has reweighted the 2017 NFS data.

Additionally, output price inflation has also led to an increase in the number of farms represented by the Teagasc NFS, with a larger share of the total farm population meeting the €8,000 standard output threshold for coverage within the survey.

As a result of these changes, the 2017 income estimates have been revised. These revisions have the largest absolute impact on the average income estimate for Cattle Rearing (reducing the previously published income estimate for 2017 by about €1,900) and for the average income estimate for Dairy (increasing the previously published income estimate for 2017 by about €2,700).

National Farm Survey Results, 2018

The results for 2018 issued in July 2019 shows that the average family farm income (FFI) for 2018 was €23,333, a decrease of 22% from the record high in 2017. The adverse weather conditions in 2018 with a late cold spring and long hot dry summer resulted in increased feed and fertiliser usage pushing up costs on many farms and reducing output. However, this average FFI conceals differences across the various farm types.

Family Farm Income per Farm (FFI)

FFI is defined and calculated by Teagasc by deducting all farm costs (direct and overhead) from the value of farm gross output. 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 nonfarming sources and thus may not be equated to household income.

Table 2.2 Headline results from National Farm Survey

table 2.2

Source: Teagasc, National Farm Survey 2018

Family Farm Income by System

Family Farm Income (FFI), the return from farming for farm family labour, land and capital, is the principal measure used in the Teagasc National Farm Survey. Average FFI conceals differences across the various farm types.

Average dairy farm income decreased by 31% to €61,446 in 2018. This decrease was driven by the very difficult weather conditions resulting in increased use of feed and fertiliser. The decline in Dairy FFI was driven mainly by a 43% increase in concentrate feed expenditure.

Cattle rearing farms had an average income of €8,311, a 22% decrease on 2017. The decline in output and a slight increase in costs were the key drivers of this decrease. Likewise for Cattle Other farms, which saw the average income decrease by 10% to €14,560. Sheep farmers were also impacted by the weather conditions with average income on sheep farms dropping to €13,297, a decrease of 23% on 2017.

Tillage farms had an average income of €40,650, which was an 13% increase on 2017. Tillage FFI increased despite a 10 percent increase in overall production costs. Gross output rose by a slightly larger magnitude. However, the situation on individual Tillage farms varied greatly. It was a year of two halves with spring crops particularly negatively affected, due to late planting and very dry weather conditions over the summer.

Family farm income varies considerably by farm system. The large variations illustrated in Figure 2.4 below are driven by differences in farm size and profitability and production costs. Dairy farms are consistently the most profitable farms. However, it should be noted that almost all dairy farms are classified as full-time farms, with farms requiring 0.75 of a standard labour input being defined as full-time and those requiring less as part time. Most cattle farms and the majority of sheep farms are classified as part time in terms of labour input requirements, even though in many cases the farmers may not have off-farm employment.

Source: Teagasc, National Farm Survey 2018

Figure 2.4 Family Farm income by system, 2015-2018

figure 2.4

Source: Teagasc, National Farm Survey 2018

Also drawing on the 2018 NFS data, table 2.2 shows that direct payments averaged €17,244 per farm in 2018, accounting for 74% of family farm income. Again, there are noticeable differences between farm types; estimates for dairy farms show that the direct payments account for only 34% of income, while cattle and sheep farms are very reliant on direct payments and would be operating at an economic loss without them.

Family Farm Income by Farm Type per Hectare

Family farm income is significantly higher on dairy farms than on any other farm type, even when farm size is taken into account. Similarly, when distinguishing between full-time and part-time farms in terms of labour input, dairy farms again produce higher family farm income per hectare.

The average farm size in 2018 was 43 hectares, with average income per hectare coming in at €541; this is down from €692 in 2017. The average dairy farm was 59 hectares in size and had an average FFI of €1,047 per hectare. Tillage had the second highest economic return per hectare at €675, an increase of €75 on 2017 figures. In 2018, the average income per hectare was lowest on Cattle Rearing farms, at €270. Average FFI per hectare on Cattle Other farms was €391 while the equivalent figure on sheep farms was €276, down from €369 in 2017.

Figure 2.5 Family Farm Income per Hectare, 2018

figure 2.5

Source: Teagasc, National Farm Survey 2018

crops

Full and Part Time Farms, 2018

A comparison of financial data for full-time and part-time farms, drawn from the results of the 2018 National Farm Survey is highlighted in Table 2.3. In 2018 average farm income for the 32% of farms classified as full-time was €51,759 compared to €10,141 for part-time farms. Full-time farms are often the larger more viable farms with average utilisable agricultural area (U.A.A) of 70.3 hectares compared to 30.5 hectares for part-time farms. Almost half of the full-time farms are dairying while the majority of part-time farms are Cattle Rearing or Cattle Other farms.

The 68% of farms classified as part-time were particularly reliant on Subsidies and direct payments, averaging €12,650 to cover production costs. Without these direct payments, many part-time farms would be operating at an economic loss.

Table 2.3 Main results from National Farm Survey for Full-time and Part-time farms, 2018

table 2.3

Source: Teagasc, National Farm Survey 2018

Off farm Employment Income, 2018

Just over half (51%) of farm households had an off-farm income employment source in 2018, a slight increase on 2017. Dairy farm households were slightly more likely to have an offfarm income, within the household, with the proportion of farm spouses employed off-farm generally higher. This may reflect the younger demography of these households. The higher age profile of non-dairy households is reflected in the fact that, on average, they were more than twice as likely to be in receipt of pensions.

The proportion of farm households where the spouse was employed off-farm remained unchanged at 33%, with the same proportion of farmers employed off-farm.

The levels of off-farm employment differs by system, with cattle farmers more likely to work off-farm. 42% of Cattle Other farmers had an off-farm job in 2018; the equivalent figure on Cattle Rearing farms was 39%. A lower proportion of Sheep and Tillage farmers worked off farm (32% & 33%), whereas only 12% of Dairy farmers were employed off-farm. The incidence of off-farm employment varies across regions and reflects the dominant type of farming there.

More than 40% of farmers in the West worked off-farm in 2018, compared to about 25% in the Southern regions, where farmers were less likely to be employed off farm due to the predominance of dairy farming there.

Figure 2.6 Estimate of Off-Farm employment income of the Farm Holder, 2018

figure 2.6

Source: Teagasc, National Farm Survey 2018

2.5

Farm Viability Analysis, 2018

While farm income is a useful measure, it does not account for the economic viability of the farm business nor does it make any allowance for the role of income earned outside of the farm in ensuring the sustainability of farm households. To help address this issue the NFS also provides a viability profile of its farms broken into three categories.

Viable

A farm is defined as economically viable if the farm income can remunerate family labour at the minimum agricultural wage, and provide a 5% return on the capital invested in nonland assets.

Sustainable

If the farm business is not viable, the household is still considered sustainable if the farmer or spouse has an off-farm income.

Vulnerable

A farm is considered to be economically vulnerable if the farm business is not viable and if neither the farmer nor spouse works off the farm.

Teagasc’s National Farm Survey results found that 32% of Irish farms that were represented in the survey were classified as viable in 2018, down from 43% in 2017, with a further 34% classified as sustainable mainly due to off-farm income, while the remaining 34% were deemed to be economically vulnerable. The decrease in the percentage of farms classified as viable in 2018 relative to 2017 is reflective of the drop in average FFI in 2018 compared to 2017.

Figure 2.7 Viability of National Farm Survey Farms, 2018

figure 2.7

Source: Teagasc, National Farm Survey 2018

The viability of farming varies quite considerably by farm system. In 2018, 72% of dairy farms were considered economically viable, in comparison to “Cattle Other” which had 26% of farms classified as economically viable and a further 37% classified as sustainable. The results of the Teagasc NFS indicate that there are about 30,000 viable farms comprising of approximately 12,000 dairy farms, 3,000 cattle farms, and 7,500 cattle other farms, 3,000 sheep farms and 4,500 tillage farms.

Figure 2.8 Viability of National Farm Survey Farms by Sector, 2018

figure 2.8

Source: Teagasc, National Farm Survey 2018

The South is the most economically viable region and contains the highest proportion of viable farms at 44%. The Northern and Western region at 41% have the highest proportion of vulnerable farms. The North and West region also has the largest proportion of sustainable farms at 43%. In general, these farms are sustainable due to the presence of an off-farm income source highlighting the importance of off-farm employment in the region.

Figure 2.9 Viability of National Farm Survey Farms by Region, 2018

figure 2.9

Source: Teagasc, National Farm Survey 2018

farmers hand
2.6

Direct Payments

Total payments made to farmers were estimated to be approximatly €1.8 billion in 2018. This figure includes subsidies (defined by Eurostat) used by the Central Statistics Office in calculating operating surplus in agriculture (section 2.2), such as Basic Payments Scheme, Areas of Natural Constraint, GLAS and disease compensation payments. It also includes payments such as Forestry Premia, and the Targeted Agricultural Modernisation Scheme, which are not counted as direct payments by the Central Statistics Office.

Table 2.4 Distribution of BPS, Greening and Young farmers scheme by region, 2018

table 2.7

Source: Department of Agriculture, Food and the Marine

Direct payments (subsidies less taxes) have generally accounted for about 70% of aggregate farm income since the turn of the century but, due to recent increases in farm income, this has dropped to an average of just 56% over the past five years. These direct payments have remained relatively stable since 2005, so as aggregate farm income increases, as in 2017, the relative importance of direct payments reduces. They provide a basic income for farm enterprises and are of particular significance on cattle and sheep farms where they represent up to 100% or more of family farm income.

Figure 2.10 shows aggregate farm income or operating surplus and subsidies less taxes as a percentage of aggregate farm income. It clearly illustrates the importance of subsidies in a year such as 2009 when aggregate farm income fell by 27%.

Figure 2.10 Aggregate farm income and subsidies since 2000

figure 2.10

Source: Central Statistics Office, Output, Input & Income in Agriculture Final Estimates 2018

In 2015, the average direct payment granted per hectare of area declared by farmers amounted to €256 per hectare in the EU. This average direct payment per hectare ranges from €115 per hectare in Lativa to €610 per hectare in Malta. Direct payments per hectare to Irish farmers are just slightly above the EU average of €256. It comprises the basic payment and greening payment along with the young farmer payment.

Figure 2.11 EU Direct Payments Per Hectare by Member State - 2015

figure 2.11

Source: European Commission, Report on the implementation of direct payments 2015

Basic Payment Scheme

The Basic Payment Scheme (BPS) and related Greening payment accounts for around 70% of all direct payments to farmers. In 2018 around 123,000 farmers received these payments with the average payment around €9,500. There is significant variation in the value of payment dependent on county, with the average payment in Leitrim, Mayo, Sligo, Monaghan, Donegal and Wicklow between €6,000 and €7,000, in contrast to an average payment in Dublin, Kildare, Kilkenny and Waterford of between €14,000 and €15,000.

BPS and Greening payments totalled €1.2 billion in 2018. The other significant payments were through Areas of Natural Constraint, some €230 million and GLAS payments amounting to €230 million.

Forestry Premia are also a significant income source for many farmers with about €70 million paid to over 13,000 farmers each year.

Figure 2.12 Average BPS and Greening Payment by County, 2018

figure 2.12

Source: Department of Agriculture, Food and the Marine

Non-Agricultural Activities

The CSO’s 2016 Farm Structure Survey found that over 16,400 farms reported that they had undertaken activity on the farm to supplement their income from traditional farming. Some 8,000 farms engaged in forestry and some 5,000 farms in agricultural contracting.

Of the farms engaged in forestry, 4,600 were in the Southern and Eastern region and 3,400 in the Border, Midland and Western region.

Figure 2.13 Farms engaged in gainful non-Agricultural Activity

figure 2.13

Source: Central Statistics Office’s Farm Structure Survey 2016

2.7

Farm Numbers and Size

The CSO’s Farm Structure Survey (FSS) 2016 is the first since 2013 and provides a useful insight into farm numbers and farm demographic data which is unavailable from other sources. Table 2.5 below shows the total number and average farms size.

In 2016 there were 137,500 farms in Ireland. A little more than half of these were located in the Border, Midland and Western region. The average farm size in the state was 32.4 hectares. Farms located in the Southern and Eastern region were larger than those in the Border, Midland and West, with an average farm size of 38.3 hectares compared to 27.1 hectares.

Table 2.5 Number and Size of Farms, 2016

table 2.5

Source: Central Statistics Office, Farm Structure Survey 2016

Figure 2.14 Number of farms by category and region, 2016

figure 2.14

Source: Central Statistics Office’s Farm Structure Survey 2016

Specialist Beef production continued to be the most common farm type, accounting for over half of all farms in 2016 (78,300). Over two thirds of Specialist Sheep farms were in the BMW region (68.2%), while the SE Region contained almost 80% of Specialist Tillage farms (78.7%) and Specialist Dairying farms (78.3%). Specialist Beef production was more common in the BMW region, where it accounted for almost six in ten of all farms (58.7%). In contrast under half (41.3%) of farms in the SE region were engaged in Specialist Beef production.

Organic production

According to Eurostat the share of utilised agricultural area (UAA) in Ireland allocated to organic farming in 2016 was 76,700 hectares or 1.7% of total UAA. This ranked Ireland among the bottom three countries in the EU along with Romania and Malta in terms of land allocated to organic production. Austria in comparison has 21% of its UAA devoted to organic production, followed by Sweden and Estonia at 18%.

2.8

Age Profile of Farmers

According to the FSS 2016, more than half of farm holders were aged 55 or over. Farm holders over 65 years made up 30% of all farm holders, while 25% are in the 55 to 64 years age group. In 2013 the over 65 age group comprised 27% of all farmers. The number of young farmers under 35 years old was 5.4% in 2016, down slightly on the 2013 figure of 5.9%. This indicates an aging farm holder population with less young farmers.

In comparison to Ireland, 2018 Eurostat data on the age profile of farm holders in the EU 28 countries shows that 32% of all EU farm holders are over 65. However, the age profile of farm holders varies widely between EU countries. In Portugal 52% of farm holders are over 65 years while in Germany this age group accounts for only 8% of farm holders.

Table 2.6 Number of Farms1 by Age of Farm Holder, 2013 - 2016

table 2.6

1 Family Farms only therefore lower total figure as Family farms account for 99.7% of all farms.

Source: Central Statistics Office, Farm Structures Survey 2013

Source: Central Statistics Office, Farm Structure Survey 2016

Figure 2.15 Age profile of Department of Agriculture, Food and the Marine clients, 2018

figure 2.15

Source: Department of Agriculture, Food and the Marine

The age profile of farmers can be further assessed using data from an exercise undertaken on the Department’s Customer Client System. In total, 155,953 farmers (each in receipt of a basic payment) were captured in this analysis and results indicate that the largest cohort of farmers in receipt of payments are in the 55 – 59 age bracket. The proportion of farmers under 35 has increased by 8% between 2015 – 2018 accounting for just under 10% of farmers. It should be noted that this analysis excludes farms with herd numbers in joint names, many of which include a young trained farmer.

2.9

Young Farmers

While the Common Agricultural Policy defines a young farmer as a person below 40 years of age, Eurostat traditionally records the age as 35 years. Based on Eurostat data the share of total farm managers accounted for by young farmers in Ireland fell from 10.7% in 2005 (of which 9.8% men, 0.9% women) to 6.1% in 2016 (5.6% men, 0.5% women).

Figure 2.16 Age Classes of farm managers, by gender, EU-28, 2016 (% of all farm managers)

figure 2.16

Source: EUROSTAT, Farm indicators

In 2013 37% of young Irish farmers had full agricultural training and a further 21% had basic training. According to EUROSTAT in 2010 the number of young Irish farmers with full training was more than double the EU-28 average, indicating a good level confidence among young Irish farm managers.

Figure 2.17 Agricultural Training for Young Farm Managers in Ireland and EU-28

figure 2.17

Source: DG AGRI – EUROSTAT

2.10

Labour Input in Agriculture

The FSS 2016 found that total labour input on Irish farms was calculated as 160,700 annual work units, of which 52% was provided by the farm holders, 41% by other family members and 7% by non-family members. This work was carried out by 137,100 farm holders and 109,800 family members along with 18,500 regular non-family workers.

27% of regular family workers were female, which is in contrast to the 12% who are farm holders or in receipt of farm payments.

Figure 2.18 Labour Input in Agriculture, 2016

figure 2.18

Source: Central Statistics Office, Farm Structure Survey 2016

figure 2.18

Table 2.7 Comparison of Actual Labour* versus Estimated Labour Requirement (Standard Man Days**), 2018 preliminary Results

table 2.7

Source: Teagasc, National Farm Survey 2018

*Actual labour unit is defined as 1,800 hours or more worked on a farm by a person over 18 years

**Standard Man Days (SMD) Labour Unit eight hours of work supplied by a person over 18 years of age. The number of SMD required per hectare for the different crops and per head for various categories of livestock is used to calculate the total number of SMDs required to operate the farm

2.11

Employment

Employment in the agri-food sector accounts for an average of 173,000 jobs in 2018 or 7.7% of the total employment in Ireland. Agriculture, forestry and fishing accounts for around 109,000 while the food and beverages sector employs close to 58,000 with wood and wood processing accounting for a further 6,000 jobs. While these numbers vary during the year due to seasonal factors the trend since the turn of the century has seen numbers employed dropping.

Figure 2.19 Employment in the Agri-Food Sectors 2008 to 2018

figure 2.19

Source: Central Statistics Office, Labour Force Survey 2019

The fall in numbers employed have mainly been in agriculture, forestry and fishing as there are similar numbers employed in the food and beverages sector in 2018 compared to 2000. Employment in the wood and wood processing sector fell from almost 10,000 in 2000 to 4,200 in 2015 but has increased again to 6,000 in 2018.

According to Bord Iascaigh Mhara there were 14,359 people employed in the seafood business around our coast in 2018, both direct and indirect employment. Estimates of employment in the forestry sector by The Irish Forestry and Forest Products Association (IFFPA) are 12,000 jobs.

While the overall level of employment is just less than 8% nationwide, the level of employment in the regions outside Dublin is much greater. In 2016 overall employment levels in the agrifood sector were 8.3% across the state but, in the Border region agri-food employment accounted for 14.2% of overall employment. Only in the Dublin and Mid-East regions did the level of agri-food sector employment drop below the national average.

In the other six regions of the state the agri-food sector accounted for 9.7% to 14.2% of total employment highlighting the importance of the agri-food sector to the regions outside the capital and surrounding areas.

Table 2.8 Agri-food Employment, 2018

table 2.8

Source: Central Statistics Office, Labour Force Survey 2018

Figure 2.20 Agri-food sector Employment, 2008-2018

figure 2.20

The Labour Force Survey (LFS) is a large-scale, nationwide survey of households in Ireland. It is designed to produce quarterly labour force estimates that include the official measure of employment and unemployment in the state (ILO basis). The survey began in January 2016 and replaced the Quarterly National Household Survey (QNHS) in Q3 2017.

Source: Central Statistics Office, Labour Force Survey 2018

2.12

Land Prices and Land Mobility

Society of Chartered Surveyors Ireland/Teagasc Land Market Review & Outlook 2018

The annual Society of Chartered Surveyors Ireland/Teagasc Land Market Review & Outlook provides an in-depth analysis of key agricultural farmland market trends in 2018 and provides an outlook for 2019. The average national price per acre for agricultural land without a residential holding was €9,554 per acre (€23,608 per ha).

This figure varies considerably on a provincial basis.

Connaught/Ulster

Average value per acre for agricultural land without a residential holding in Connaught increased by 46% for parcels less than 50 acres to €7,016, parcels between 50 to 100 acres increased by 57% to €6,575 and areas over 100 acres category increased by 67% to €6,205.

Munster

In Munster, the average price per acre for agricultural land with and without a residential holding appeared to have stabilised in 2018 from its 2017 level. Stabilisation was also the case for land without a residential holding, values in 2018 were about 4% above those of 2017, for smaller parcels of less than 50 acres, which increased to €11,265. Land parcels between 50 to 100 acres were valued at €10,143 in 2018 while areas over 100 acres were valued at €10,457.

Leinster (Excl. Dublin)

Year-on-year land values also stabilized in Leinster, (excluding Dublin) with negligible changes of no more than 4% in any size group for both land with and without a residential holding. Smaller parcels of land less than 50 acres were valued at €12,929. Land parcels between 50 to 100 acres were valued at €10,109 in 2018 while areas over 100 acres were valued at €9,411.

Figure 2.21 Average price per acre of agricultural land (areas up to 50 acres), without entitlements or a residence, 2010 v 2018

figure 2.21

Source: Society of Chartered Surveyors Ireland/Teagasc Land Market Review and Outlook 2019

Figure 2.22 Average Price per acre of agricultural land (areas between 50-100 acres), without entitlements or a residence, 2010 v 2018

figure 2.22

Source: Society of Chartered Surveyors Ireland/Teagasc Land Market Review and Outlook 2019

Figure 2.23 Average price per acre of agricultural land (areas over 100 acres), without entitlements or a residence, 2010 v 2018

figure 2.23

Source: Society of Chartered Surveyors Ireland/Teagasc Land Market Review and Outlook 2019

Irish Farmers Journal Land Price Report 2018

The latest Irish Farmers Journal Land Price Report, published in March 2019 indicated that the average price for land in Ireland remained relatively stable at €9,072 an acre in 2018 down from €9,088 in 2017.

Over 33% of land sales nationally were attributed to beef farmers, with dairy farmers involved in 23% of land sales. Business people were also active in the land market with 17% of land transactions attributed to them. Business people paid an average price of just over €12,000 per acre, purchasing 8,000 acres in 2018.

The report also states that since 2015, the market for forestry land has become more competitive with some counties, particularly in the west of Ireland, noting a greater percentage of sales to forestry companies. For this reason, the price paid for forestry land is also increasing. The demand for forestry as an investment remains high with the average price for forestry land at just over €4,900 per acre.

Nationally, the average value of agricultural land in 2018 was €9,072 per acre (€22,417 per hectare). This figure varies considerably on a provincial basis, with Munster reporting an average per acre value of €9,880 (€24,413), Leinster reporting €10,754 per acre (€26,573) while Connaught reported €6,087 (€15,040) and Ulster reported €7,656 per acre (€18,918).

Land prices are based on several key factors including quality of the land, size of the land parcel, whether there are entitlements attached or, if there is a residence on the land parcel. In 2018, Dublin saw the highest price in Ireland, at almost €21,983 per acre, followed by Kildare at €13,621 per acre. At the other end of the scale, the lowest average price by county was in Leitrim at €5,222 per acre followed by Mayo at €5,598 per acre.

Supply of land

The amount of land brought to the market last year fell 11% to 70,246 acres compared with 78,350 acres in 2017.

In total, 31,687 acres were sold last year, down 6.4% from the 33,864 acres sold in 2017, an overall success rate of 45%.

A total of 1,662 land parcels were offered to the market, up from 1,536 farms/land parcels in 2017.

Leasing and rental data

The Central Statistics Office Farm Structures Survey 2016 indicates that almost 47,000 farms had land rented -in, with 5,700 farms 100% rented. Of those farms that include rented land, 53% were involved in specialist beef production and 20% in specialist dairying. Farms with a standard output of €100,000+ were responsible for renting 22% of the farms.

Land Mobility & Long-term leasing

A key policy objective of the Agri-taxation Review 2014 was to increase the mobility and the productive use of land. It recommended the retention and enhancement of the income tax relief for long-term leasing, which allows progressive farmers to enlarge their farm holdings and increase productivity.

It also:

Over recent years, as a result of the changes brought about by the Review, there has been a significant shift from the short-term renting (conacre) system to long-term leasing. The main official source of data in this regard is from Revenue income tax returns, which show a doubling of long-term leases from 2012 to 2016.

Figure 2.24 Change in number and value of long term leases, 2012 to 2016

figure 2.24

Source: Revenue, The Farming Sector in Ireland A Profile from Revenue Data Statistics Update 2018

The change in demand for long term leases in 2018 relative to 2017 is shown in Figure 2.25.

Figure 2.25 Change in demand for long term leases, 2018 V’s 2017, by Region

figure 2.25

Source: Society of Chartered Surveyors Ireland/Teagasc Land Market Review and Outlook 2019

Conacre & long-term leases

A variety of factors affect the quantity of land rented as Conacre, (a short rental of less than twelve months duration). Farmers may wish to rent some extra land to obtain extra grazing, or for tillage. Their expectations in relation to cattle and crops will affect their desire to do this. Natural factors such as the weather may also come into play. Farmers may wish to rent land to provide fodder in a year of shortage or provide grazing for cattle they wish to keep to expand a herd or to sell later than planned.

Figure 2.26 Change in Conacre letting in 2018 V’s 2017, by Region

figure 2.26

Source: Society of Chartered Surveyors Ireland/Teagasc Land Market Review and Outlook 2019

Figure 2.27 Number of farms with rented land, 2016

figure 2.27

Source: Central Statistics Office, Farm Structure Survey, 2016

2.13

Investments, Borrowings and Interest

Expenditure

Total expenditure by Department of Agriculture, Food and the Marine was over €3 billion in 2018. Payments to farmers totalled almost €1.8 billion including Basic Payment Scheme, Rural Development and Forestry Payments.

Table 2.9 Expenditure on Irish Agriculture, 2018

table 2.9

Source: Department of Agriculture, Food & the Marine, Annual Report

Investments

Gross fixed capital formation or capital investment in agriculture decreased by 7% in 2017, reflecting market sentiment arising from lower commodity prices and uncertainty over Brexit. However, the period 2012 to 2016 has seen relatively stable levels of investment since the significant decrease in the period 2009/10, which can attributed to the financial crisis and the conclusion of the Farm Waste Management Scheme at the end of 2008.

Table 2.10 Gross Fixed Capital Formation 2009-2017 (€million) current prices

table 2.10

Source: Central Statistics Office, National Income and Expenditure 2018

Borrowings

Central Bank data shows that credit advanced to Primary Industries namely (i) agriculture, (ii) forestry, logging, mining and quarrying and (iii) fishing and aquaculture sectors in 2018 was €840 million which is similar to 2017, and approximately €100 million greater per annum than during 2015 and 2016. Further analysis shows that new lending to primary agriculture accounts for 90% of this total, forestry, logging, mining and quarrying accounts for 3% and fishing and aquaculture 7%.

Despite this increase in lending, the credit outstanding at the end of 2018 is €3.5 billion, down from €4.7 billion at the end of 2010 and down from a peak of €6.4 billion in September 2008. This is indicative of the deleveraging that has been occurring in the wider economy over roughly the same period where repayments have outstripped new lending. Primary Agriculture accounts for 15% of the €23.5 billion outstanding debt held by Irish SMEs, or 23% when Financial Intermediation and Property Related Activities are excluded.

Figure 2.28 New borrowings by Agriculture, Forestry and Fisheries SMEs, 2010 - March 2019

figure 2.28

Source: Central Bank of Ireland, Trends in SME and Large Enterprise Credit and Deposits Q1 2019

Investment

Despite difficult conditions, gross new investment on Irish farms increased by 8% in 2018, totalling almost €941 million nationally.

Investment on Dairy farms accounted for more than half of total investment in 2018, at an average of €31,714 per farm. This figure is up 19% on 2017. Investment on Tillage farms increased by over 34% on average, to €11,499. Investment on Cattle Other farms also increased significantly in 2018, up 21% to €5,774. A reduction in investment on Cattle Rearing and Sheep was seen in 2018, with investment down 19% and 32% to €3,913 and €4,270 respectively.

Table 2.11 Percentage of Farms with Borrowings and Average Debt, 2018

table 2.11

Source: Teagasc, National Farm Survey 2018

Figure 2.29 presents the debt to income ratio for all farms by farm system (including those without debt) alongside those with debt. Although less than one-third of cattle farms reported having debt in 2018, the debt to income ratio of those with borrowings is relatively high at 2.3. Dairy farms average debt to income ratio was lower at 1.8. The figure on Sheep and Tillage farms was 1.8 and 0.95 respectively.

Figure 2.29 Debt to Income Ratios for all Farms and those with Debt 2018

figure 2.29

Source: Teagasc, National Farm Survey 2018

field

Interest Rates

Interest rates for the sector show a slight increase on 2017 and are higher than the average across all SME sectors. Central Bank figures show:

Some of the difference may be attributable to the profile of the loans, as loans to the agriculture sector tend to be lower in value and higher in volume with fixed costs therefore spread over smaller amounts.

Figure 2.30 Interest Rates in Primary Agriculture

figure 2.30

Source: Central Bank of Ireland, Business Credit and Deposits 2018

Interest Rates – In comparison to other EU countries

The Central Bank of Ireland’s SME Market Report 2018 indicates that interest rates in Ireland are substantially above Euro area averages. The interest rate for Non-financial Corporation (NFC) loans of less than €0.5m is 5.2% as of March, twice that of EA1 countries and EA2 countries, where the comparable interest rates is currently 2.6%.

As of Q1 2018, a positive annual credit growth rate of 3% was recorded for primary industries, whereas negative growth was reported for Manufacturing (-6.4%) Construction (-9%) and Wholesale, Retail, Trade & Repairs (-5.1%)

The Department of Finance’s SME Credit Demand Survey covering April to September 2017, records that 23% of SMEs applied for bank finance, an increase from the low of 20% recorded in the previous survey. Demand for finance is most common among Medium firms and lowest among Micro firms.

Note: The Central Bank compares Ireland to two groups of countries: EA1 which comprises Austria, Belgium, Germany, Finland, the Netherlands, and France and EA2 which is formed by Portugal, Italy, Spain and Greece.

Non-performing loans

Central Bank figures show that at December 2017 the default rate for SMEs was 22.6%. The primary industries sector dominated by agriculture has the lowest share of outstanding balances in default (12.9%)

Figure 2.31 SME Default Rates by Sector, December 2018

figure 2.31

Source: Central Bank of Ireland, SME Market Report 2018

Future Growth Loan Scheme

The Scheme was developed by the Department of Agriculture, food and the Marine and the Department of Business, Enterprise and Innovation, in partnership with the Department of Finance, the SBCI and the European Investment Fund (EIF). It will be delivered through participating finance providers and make up to €300 million of investment loans available to eligible Irish businesses, including farmers and the agri-food & seafood sectors.

The loans are competitively priced with an initial maximum loan interest rate of 4.5% for loans less than €250,000. The loans are for terms of 8-10 years and unsecured up to €500,000. This type of innovative finance, which has been previously unavailable in the Irish market, will support strategic long-term investment in a post-Brexit environment.

A minimum loan amount of €100,000 applies up to a maximum of €3,000,000 per applicant. Considering the needs of Irish farmers a specific minimum of €50,000 applies to them.

Loan eligibility applications for the Future Growth Loan Scheme may be made through the Strategic Banking Corporation of Ireland’s (SBCI) website. On approval, SBCI will assign an eligibility reference number. This reference number along with the loan application may then be provided to a participating lender.

Brexit Loan Scheme

The €300 million Brexit Loan Scheme was developed by the Department of Agriculture, Food & the Marine in cooperation with the Department of Business, Enterprise and Innovation (DBEI) and the Strategic Banking Corporation of Ireland (SBCI) to provide working capital support to enable eligible Irish businesses to implement the necessary changes to address the challenges posed by Brexit. The Scheme opened for applications on 28th March 2018 and it will remain open until 31st March 2020.

It provides for loans of €25,000 to €1,500,000 per eligible enterprise at a maximum interest rate of 4%, ranging from 1 year to 3 years, with unsecured loans up to €500,000. The loans can be used for future working capital requirements or to fund innovation, change or adaptation of the business to mitigate the impact of Brexit. Applications for eligibility assessment must be made to the SBCI who, on approval, assign an eligibility reference number. This reference number along with the loan application may then be provided to a participating lender.

SBCI: Agri Cashflow Support Loan Scheme

The Agriculture Cash Flow Support Loan Scheme, developed in cooperation with the Strategic Banking Corporation of Ireland (SBCI) provided low-cost flexible working capital finance to farmers to address the impact of the change in the sterling exchange rate and lower commodity prices in some agriculture sectors in 2016 and 2017. The scheme made €150 million available to farmers at interest rates of 2.95%.

Distributed and administered through AIB, Bank of Ireland and Ulster Bank, the Scheme provided farmers with a low cost, flexible source of working capital and allowing them to pay down more expensive forms of short-term debt, ensuring the ongoing financial sustainability of viable farming enterprises.

DAFM’s contribution of €25 million included €11 million from the EU’s ‘exceptional adjustment aid for milk and other livestock farmers’ and €14 million in national funding. SBCI used the €25 million of funding provided by DAFM to leverage the total amount of €150 million and, along with the European Investment Fund’s ‘COSME’ (the EU programme for the Competitiveness of Enterprises and SMEs), is providing the guarantee required to underpin the loan’s flexibility and lower the cost of the loans.

Progress on the Agriculture Cashflow Support Loan Scheme

The provisional final drawdown for the Scheme is that there were 4,246 applications totalling €144,903,656, with an average loan size of €34,127 and an average loan period of 41 months.

Table 2.12 Summary of loans by Sector (Provisional Estimate)

table 2.12

Source: Department of Agriculture, Food and the Marine

2.14

Women in Agriculture

Women in Agriculture Ireland

The CSO Labour Force Survey (LFS) (CSO, Labour Force Survey, 2018) shows that in 2018, 16.4% of workers in the agriculture, forestry and fishing sector were female. The trend since 2000 is increasing slightly, with the proportion rising from an average of 14.2% between 2000 to 2009 to 16.2% over the period 2010 to 2018. While the proportion of females in the agri-food labour force is low, it compares favourably against the construction sector (5.5%), although is below that in the Industrial sector (28.5%). In an EU context, an average of 28% of farm managers are female.

The Teagasc ‘Education in Vision’ report highlights that while 51% of recipients of all QQI further education awards were female, about 11% of the 14,588 QQI further education awards made for Teagasc programmes in the period 2012-2016, were to female graduates. The report points out that female participation in agricultural higher education is observed to be greater, in the range of 40%, for some university degree programmes. By contrast, female participation in veterinary education in Ireland is much higher and can range from 70% to 80%. The Teagasc report refers to a research by the Scottish Government on Women in farming and the agriculture sector, which highlights that “women themselves often view [agricultural] training groups and programmes as being for men and [that they] feel ‘unwelcome and conspicuous in this space’”. The report concludes that “the cultural norm of sons inheriting farms is very resistant to change”. The report also points out that research on female participation in agricultural education and farming careers suggests key influencers include: mothers, schools, and overall perceptions of farming as a career.

According to the Department’s client database only 12% of the 115,664 farmers in 2015 were women and they were slightly older than their male counterparts, with an average age of 62 compared to 57 for men. 44% (6,211) of female farm owners are over 65 years with 31% of these over 80 years of age, which may suggest that they received the farm when they were widowed. In comparison only 29% of total male farmers are over 65.

Figure 2.32 Farms in receipt of Basic Payment Scheme payments by Gender, 2015

figure 2.32

Source: Department of Agriculture, Food and the Marine

Women in Agriculture in EU 28

According to Eurostat’s, Agriculture, forestry and fishery statistics 2018 publication, 28% of farmers in the EU 28 were women in 2016, increasing from 26% in 2005. Almost 9% of this cohort were classified as a young farmer under the age of 40 years. Gender imbalance among farmers is particularly strong in the Netherlands where only 5% of farmers was female in 2016. Female farmers were also particularly uncommon in Malta at 6%, Denmark at 8% and Germany at 10%. There was a closer gender balance in Latvia and Lithuania where 45% of farmers were female.

ACORNS (Accelerating the Creation of Rural Nascent Start-ups)

The report of the Commission for the Economic Development of Rural Areas (CEDRA) contained a recommendation that a Rural Innovation and Development Fund should be developed to support ”innovative, small scale pilot initiatives that explore the diverse range of potential identified through the CEDRA process”. At the time, national research also highlighted that female entrepreneurship rates were half that of their male counterparts.

To improve these gender statistics, and to encourage a stronger level of enterprise development in rural areas, the Department established the ACORNS programme under its Rural Innovation and Development Fund.

ACORNS provide early stage rural female entrepreneurs with the knowledge, support and networking opportunities to advance the development of their businesses. Over 200 female entrepreneurs have taken part in ACORNS in the four cycles between 2015 and 2018. 147 participants were involved in the most recent cycle of ACORNS, including 95 previous participants who continue to be supported through the ACORNS Community. Past participants have testified to the difference this programme has made both to themselves and to their businesses with increased sales, exports and job creation, in addition to the valuable connections they have made through broadening their support network. The progress of the 45 participants who completed the fourth year of the programme in 2019 is as follows:

ACORNS is based on a clear understanding that entrepreneurs learn best from each other and the initiative is focused on peer support and collaborative learning. Participants take part in interactive round table sessions facilitated by other female entrepreneurs who have successfully started and grown businesses in rural Ireland. Acting in a voluntary capacity, these ‘Lead Entrepreneurs’ share their insights and experience with the group, offering their support to the participants to examine and address the issues and challenges they face in progressing their businesses.

CASE STUDY

Lisa Larkin - Durrow Mills

durrow mills logo

As a mother of four young children and graduate of UCD Agricultural Science, Lisa Larkin was always on the lookout for healthy and nutritious food. This passion and interest led her to discover sprouted grains, which are considered healthier because the sprouting returns the whole grain to a plant state, allowing the body to digest it more easily.

As sprouted flour was only available to buy from the USA, Lisa, who was commuting from Kilbeggan, Co Westmeath to a job as a clinical scientist in Dublin, decided to make the flour herself.

It took her 18 months to perfect the recipe and in March 2016, she launched Durrow Mills, becoming the first person in Ireland to produce sprouted flour. Lisa sprouts high-protein wheat grain and then mills it herself in a stone ground mill. She produces a range of organic sprouted grain flours, including wheat, rye, buckwheat, amaranth and a new baker’s all-purpose mix. The award winning Durrow Mills’ Organic Sprouted Fine Milled Wheat Flour won Chef’s Choice at the Blas na hEireann Irish food awards and is proving to be very popular.

In addition, she started a small bakery in September 2018, with the help of a talented baker, to supply the midlands region. The bakery specialises in organic sprouted sourdoughs using Durrow Mills flours, and also allows testing of batches and R&D of new flours, while gaining customer feedback at the same time.

Getting a new business off the ground has its challenges and Lisa credits ACORNS for helping her drive the business forward. Now in its fourth year ACORNS, a peer-based initiative focused on early stage female entrepreneurs in rural Ireland, is supported by the Department of Agriculture, Food and the Marine. Lisa has been an active participant in ACORNS since the pilot.

By engaging with other women in business, she was able to bounce ideas and problems off them and create milestones for the company. Durrow Mills flours and products, which are stone milled fresh to order, are available online and in over 65 stores nationwide as well as being supplied as bulk orders for bakeries and food manufacturers. The company has started to export this year and is working with a number of companies in the UK, France and Spain.

2.15

Small Farms

According to the CSO Farm Structures Survey 2016, of the 137,500 farms in Ireland, three out of every ten farms (43,600 farms) had a standard output of less than €8,000 and 23,000 (17%) had a standard output of less than €4,000.

In terms of geographical spread, over 27,000 (38% of total farms in the region) farms in the Border, Midland and Western region had a standard output of less than €8,000, compared to 16,400 in the Southern and Eastern region.

Figure 2.33 Percentage of farms with a standard output of less than €8,000, 2016.

figure 2.33

Source: Central Statistics Office, Farm Structure Survey 2016

Profile of Small Farms

According to the Teagasc Small Farm Survey 2015, small farms are classified as those with a standard output of less €8,000 per annum, the equivalent of 6 dairy cows, 6 hectares of wheat or 14 suckler cows.

Findings of this survey include:

Table 2.13 indicates that the average family farm income on small farms in 2015 was €2,917, or about 20% of the average income on larger cattle and sheep farms. The value of direct payments on small farms was €5,474, which was almost double the family farm income, while on the larger cattle and sheep farms, direct payments almost equalled the family farm income.

Table 2.13 Average Family Farm Income on Cattle and Sheep Farms, Small Farm Survey 2015

table 2.13

Source: Teagasc, Small Farm Survey 2015