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News : Irish Economy Last Updated: May 17, 2013 - 8:05 AM

Irish farmers hugely dependent on EU welfare after 40 years
By Michael Hennigan, Finfacts founder and editor
May 15, 2013 - 8:38 AM

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Irish farmers are hugely dependent on EU welfare 40 years after Ireland joined the then European Economic Community in 1973.

In 2012, the average direct payment per farm was €20,534 comprising a shocking 81% of farm income; only one third of farms are economically viable; 27% of farmers have an off-farm job and there are more Irish farmers over 80 years of age than under 35.

It of course isn't a shock to political leaders as most of the farm payments are funded from Brussels and there is an impression that it's better not to frighten farmers by questioning whether what is in effect welfare, may have retarded the development of agriculture since the 1970s.

Farmers made over €4bn from the national roadbuilding programme during the boom, never mind a bonanza from other development land sales.

Averages conceal a multitude but the overall figure of the industry being dependent on handouts, suggests that a minority of farmers are responsible for most of the output.

The direct payments under the EU's Common Agricultural Policy are made to farmers even if they only spend their time watching the grass grow.

According to Savills, the estate agents, in 2007, in France, each field changed hands at least once every 70 years, but in Ireland on average a field changed hands every 555 years! Total annual turnover in Ireland was less than 0.2% of the total acreage. Countries with sales restrictions, such as France, had the cheapest land.

Land was about €6,000 a hectare, compared with almost €60,000 in Ireland - -  the most expensive in Europe in 2007 -- as French land must be offered first to young local farmers. In the later years of the bubble in Ireland, demand has been boosted by purchases of 'lifestyle farms', especially within 100 km of Dublin, coupled with the increasing trend of 'off-farm' employment leading to commercial farmers in effect becoming 'hobby farmers.'

Lots of old farmers

There are more farmers over the age of 80 than under 35, but this “unbelievable” scenario needs to be addressed, Kieran O’Dowd, the new Macra na Feírme president, told the rural youth organisation’s AGM in Cork last Saturday.

He asked Simon Coveney, agriculture minister,  to order a land use audit to find out exactly how land is being farmed and by whom. “If those statistics were applied to any other profession, trade or sector, there would be an outcry and proper provision made to address the serious imbalance,” O’Dowd said.

He added that 7% of farmers in Germany were over 65 while in France, 13% were. “Compare this to Ireland where over 25% of our farmers are over 65,” he said. “We must look at ensuring that Ireland’s land is utilised to its maximum productive extent. We must also develop and promote more effective means of collaboration between farmers through partnerships, share farming and similar arrangements.”

Teagasc survey

A preliminary estimate of the Teagasc National Farm Survey results show that family farm income decreased by 15% in 2012, bringing the average income figure for the farming sector to €25,483. The increase in 2010/2011 was about 60%.

Speaking at the launch of the results in Dublin, Tuesday, Dr Thia Hennessy, head of the Teagasc National Farm Survey said: “While agricultural commodity prices remained relatively favourable in 2012, the inclement weather adversely affected production costs and crop yields. In particular, dairy farms were impacted by the wet summer and direct costs of production increased by 21%.” She also stressed that “many farmers depleted their stock of winter fodder early last autumn and this is likely to have further negative implications for income this year.”

“The €25,483 is the average income for the full population of approximately 80,000 farms and this conceals the large variation that exists across the different farming enterprises. The average income on dairy farms was €51,648, compared to just €11,743 on Cattle Rearing farms” said Brian Moran of Teagasc’s National Farm Survey.

Farming continues to remain highly reliant on direct support payments. The average direct payment per farm was €20,534 comprising 81% of farm income. The Single Farm Payment, which is currently the topic of negotiation in the ongoing Common Agricultural Policy talks, continues to be the most important component of direct payments. It comprises 58% of farm incomes on average and over 80% of income on cattle farms.

Low levels of profitability continue to be a problem for a large number of farms and only about one-third of farms are economically viable farm businesses. Almost 26,104 farm households are economically vulnerable, i.e. the business is not viable and neither the farmer nor the spouse works off the farm. The availability of off-farm employment opportunities continued to contract in 2012 and the number of farmers working off the farm fell for the sixth consecutive year. The proportion of farmers also engaged in off farm employment fell from 30% in 2011 to 27% in 2012.

Falling milk prices coupled with a significant increase in expenditure on feed stuffs led to a reduction of 24% in the average income on dairy farms in 2012. However, 2011 was a particularly good year and the 2012 income still remains slightly ahead of 2010 levels.

Teagasc said beef prices remained reasonably good in 2012, but again increased input expenditure eroded the gain in output, and income on cattle farms fell by 8%. Following a poor harvest globally, grain prices were also quite strong in 2012. However the price increase was not sufficient to offset the poor yields and income on tillage farms fell by 4%.

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