Teagasc confirms extent of drop in incomes across farm systems in 2023

The results of a new report confirm a very difficult year for income levels across farm systems in Ireland in 2023.

Dairy and Tillage farms in particular experienced steep reductions in farm income in 2023. This was largely due to a sharp decline in milk and cereal prices, and lower production volumes, in a period of stubbornly high input prices, exasperated by the bad weather. Drystock farms also experienced a notable decline in income in 2023. All farm systems recorded their lowest average incomes in several years.

The decline in Dairy and Tillage farm incomes in 2023 follows on from a year of record incomes in 2022, illustrating yet again the highly volatile nature of farm income in both of these farm systems in Ireland.

Cattle and sheep farms saw the value of output decrease, and with production costs remaining high, incomes on drystock farms in 2023 were notably lower than in 2022.

Collectively these lower price and production volume had a substantial negative influence on the average farm income in Ireland.

The results were published in the Teagasc National Farm Survey 2023 and are representative of almost 85,000 farms in Ireland.

Internationally there was a sharp downturn in dairy commodity prices in 2023, which in turn affected Irish farm milk prices. Meanwhile, favourable production conditions for cereal crops at the global level led to a global harvest which put downward pressure on international and Irish grain prices.

In 2023, there were some challenging weather conditions in Ireland over the second half of the year, with high levels of rainfall having an adverse impact on tillage yields, grazing conditions and silage production. Tillage yields were below normal and milk production fell, as cows were dried-off early in the face of low milk margins.

Across the key farm output categories in Ireland, milk and cereal prices performed worst in 2023. Milk prices were down 28% in 2023 compared to 2022, while cereal prices decreased by 30% to 35%. Finished cattle prices increased by 4% in 2023, by 7% for weanlings and 5% for store cattle. By contrast, lamb prices decreased by about 3% in 2023.

Dairy system production costs, which rose by over 30% to their highest level in 2022, remained at that record level in 2023. While the dairy cow population continued to increase in 2023, milk output volume fell by 4% in the face of low profitability and challenging production conditions at the back end of last year. It resulted in an average dairy farm income of just under €49,500 in 2023, a decrease of 69%, or in excess of €105,000, compared to the 2022 level.

In the Cattle Rearing system, comprising of farms that are mainly specialised in suckler beef production, the value of output increased by 6% in 2023, mainly due to higher cattle prices. Production costs on these farms increased by 11% on average in 2023, which was influenced by the difficult weather conditions in the second half of the year and consequent rise in feed costs. The average value of support payments for Cattle Rearing farms was up 10% on the 2022 level. The introduction of the Suckler Carbon Efficiency Programme (SCEP), National Beef Welfare Scheme (NBWS) and the Agri-Climate Rural Environment Scheme (ACRES) provides important support to incomes for farms in this system. However, the average Cattle Rearing income was just over €7,400 in 2023, down 15%, or close to €1,350, compared with the 2022 level.

The ‘Cattle Other’ system, comprises mainly of beef finishing farms, but also includes farms selling store cattle. In this farm category, the average value of farm output decreased by 5%, mainly due to a reduction in volume, including a decline in the weights of finished cattle. Finished prices declined during the summer and autumn of 2023, which impacted negatively on many farms in this system. Support payments on these farms were relatively unchanged on average. The Fodder Support Scheme continued to support incomes on these farms. Production costs on Cattle Other farms were relatively unchanged on average in 2023. Overall, the decline in output value resulted in average income of just over €14,700 in 2023 for the ‘Cattle Other’ system, a decrease of almost €3,400 or 19% compared with the 2022 level.

Aggregating across the two cattle systems, the average income for Cattle farms in 2023 was just under €12,600, a decline of 14% on the 2022 level

The Sheep system experienced a 5% decrease in the value of farm output on average in 2023, reflecting a combination of lower lamb prices and a lower volume of output. However, production costs on the average sheep farm in 2023 remained relatively unchanged, with higher feed expenditure offset by a slight decline in overhead costs. On average, the level of direct payments for Sheep farms was up 10%, aided by payments from the Sheep Improvement Scheme. Overall, the average sheep farm income was down 22%, at €12,600 in 2023 a decrease of almost €3,500 relative to the 2022 level.

In the Tillage system, Irish cereal yields were down significantly for many crops in 2023 compared to 2022 due to less favourable weather during parts of the growing season and again at harvest time. For example, the spring barley crop was particularly affected, with yields per hectare down 23%. Irish cereal harvest prices were also down 30% to 35% in 2023 compared with harvest prices in 2022, reflecting increased grain availability internationally due to favourable weather conditions in key production regions.

While some cost items such as fertiliser fell in price over the course of 2023, the decline came too late in the growing season to bring about significant cost savings. With other cost items, such as land rental increasing, production costs on a whole farm basis on tillage farms actually increased in 2023 by 8%. It is important to note however part of this observed increase in production costs is due to the enlargement of the tillage sample in the survey. The average size of the tillage farms reported in the survey increased as a result in 2023. On a per hectare basis, the increase in tillage production costs was just under 4%.

Cereal farmers benefitted from a range of support measures in 2023, leading to an increase in support payments of 9% on average. However, given the decline in output and the rise in production costs, the average Tillage farm income was down 71% in 2023 relative to 2022, taking the average income down to just €21,400, a decrease of over €52,000.

Taking account of the income developments across the various farm systems, the average family farm income in Ireland dropped by 57% in 2023 to just under €20,000. This decrease in the average farm income is strongly associated with the sharp decline in Dairy and Tillage farm incomes in 2023. Collectively these two sectors accounted for 53% of farm income in Ireland in 2023.

As all of the income figures are presented in nominal terms, the high rate of general inflation of recent years needs to be taken into consideration, as this reduces the real value of those incomes. In 2023 inflation in Ireland was over 4%.

The full Teagasc National Farm Survey 2023 is available here