Dairy and tillage farms experienced sharp increases in farm income in 2022, largely due to high milk and cereal prices, in spite of rising production costs. These farms, the National Farm Survey stated, were better able to cope with production-cost increases than other types of farms. While cattle and sheep farms also saw the value of output increase, the rise in production costs left incomes in 2022 on many of these farms either lower or relatively unchanged on the previous year. The high rate of general inflation in Ireland over the last 18 months has also eroded the real value of income in all farm systems.
Dairy system production costs reached their highest recorded level in 2022, increasing by 32 per cent, reflecting a sharp rise in direct and overhead costs. While there was relatively little change in milk output volume in Ireland in 2022, significantly higher milk prices, resulted in an average dairy farm income of just under €151,000, an increase of 53 per cent, or over €52,000, on the 2021 level. However, 1.45 family labour units were required to generate this income on the average farm, the highest labour requirement for any of the farm systems, according to the survey results.
Substantially higher cereal prices in 2022 helped to boost the value of tillage farm output, which increased on the average tillage farm by 32 per cent. Tillage farms experienced favourable weather conditions over the summer months, which led to good crop yields. However, due mainly to higher expenditure on fertiliser, feed, contracting and overheads, production costs on tillage farms increased in 2022 by an average of 32 per cent. Overall, the average income on tillage farms rose by 32 per cent, or almost €19,000 in 2022 to reach almost €77,000.
The average cattle rearing income was just over €9,400 in 2022, down over 13 per cent, or close to €1,500, compared with the 2021 level. The ‘cattle other’ system, comprises mainly of beef finishing farms, but also includes farms selling store cattle. In this farm category, the average income was just over €18,800 in 2022, an increase of 9 per cent, or over €1,500, compared with the 2021 level.
The average income on sheep farms was close to €16,500 in 2022, a decrease of 21 per cent, or €4,300 relative to the record 2021 level.
Taking account of the income developments across the various farm systems, the average family farm income in Ireland rose by almost 32 per cent in 2022 to about €45,800. However, it is important to emphasise that this increase is almost entirely attributable to the sharp rise in dairy and tillage farm incomes in 2022. A different perspective emerges when looking at income development in the drystock farming systems, with lower farm incomes reported on about half of all drystock farms in 2022.
Teagasc stated that the high rate of general inflation that has emerged over the last 18 months needs to be taken into consideration, as this has reduced the real value of all incomes. In 2022 inflation in Ireland was almost 8 per cent.
A high rate of global inflation emerged in 2022 as the world recovered from the Covid-19 lockdown. Furthermore, Russia’s illegal invasion of Ukraine particularly affected Europe’s energy market and also had an impact on the global supply of key grains and oilseeds. This high rate of inflation has continued into 2023.
As a result, higher agricultural input prices, in particular for fertiliser, fuel, electricity and concentrates caused a sharp increase in farm production costs in all farm systems. These events occurred alongside the more typical events which affect agricultural markets, such as variability in weather conditions, the report stated.
Weather conditions in Ireland in 2022 were somewhat unfavourable for grass production over the summer period, but benefitted cereal crop production, leading to an overall increase in Irish cereal yields.
Across the key farm output categories in Ireland, cereal and milk prices performed best in 2022. Milk prices were up 49 per cent in 2022 compared to 2021, while cereal crop prices increased by about 40 per cent. Cattle prices also increased in 2022, by 10 per cent for weanlings and 15 per cent for prime cattle. The increase in lamb prices in 2022 was much more modest at about 2 per cent.