Alan Matthews: global effects on farm income all appear to spell Doom and gloom

  • Alan Matthews: global effects on farm income all appear to spell Doom and gloom
    FarmIreland.t. E.
    In late July, the Committee released its situation and Outlook for mid-year for 2018. It updates its annual production in December last year, which shows for the first time, as far as 2018 can turn to Irish cattle.
    https://www.independent.ie/business/farming/comment/alan-matthews-global-influences-on-farm-incomes-all-appear-to-spell-doom-and-gloom-37233718.html
    https://www.independent.ie/business/farming/article34874287.ece/ca6b9/AUTOCROP/h342/2016-07-12_bus_22725207_I1.JPG

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In late July, the Committee released its situation and Outlook for mid-year for 2018. It updates its annual production in December last year, which shows for the first time, as far as 2018 can turn to Irish cattle.

The December report was prepared with the caveat that it was assumed normal weather conditions.

As we all know, the weather in 2018 has been anything but normal. A big change mid-year is significantly more than the cost of materials, in particular feed, now it is expected that in 2018, the result of starvation caused by the late spring and summer drought.

In the report of the Committee focuses on the situation and Outlook for four major commodities — dairy products, beef, lamb and cereals.

He does not forecast the economic accounts for agriculture in General, which show the impact on the total income of the farm.

When considering the updated estimate 2018, Recall that in 2016 2017, but especially were very good years for Irish farm income.

Agricultural factor income, which is a measure of the value added by agricultural production, including direct payments, on average, in nominal terms, with little change between 1990 and 2014, about €2.6 billion, in addition to awful in 2009.

It reached a record €4 billion in 2017, despite a slight decline in the share of direct payments.

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Agricultural entrepreneurial income, which corresponds to the income of the family farm an average of about €1.8 billion between 1990 and 2014, again with little change since 2009.

He also jumped to a record €3.2 billion in 2017.

On average, as we know, can be misleading at the regional level or at the enterprise level. In 2017 the National farm survey by the Committee shows that the average income of a family rose farm 32pc in 2017. Family farm income on dairy farms increased by 65pc on tillage farms 20pcs, on a sheep farm for 6pcs, but was unchanged on cattle farms. Even in this record-breaking amp; 35pc of the farms had a family farm income of less than €10,000.

In December, the situation and development prospects, the Committee forecast that the total income of the farm in 2018, could be reduced by about 8pcs. For dairy products, it was based on a 10pc drop in milk prices offset by an increase 4pcs milk supply, plus 6pcs increase in production costs per hectare. Net margin was expected to drop by 24 PC.

In December, the Committee had projected growth 3pcs prices for cattle in 2018 compared to 2017, moderate increase, and 4–5pc increase in cattle gross profit. Prices for mutton are expected to be reduced and material costs to increase, which leads to a decrease in gross profit.

Also in December, the Committee projected increase 7pcs in output prices for cereals farms and, despite rising costs of materials, very little net profit.

Now compare these figures with estimates updated last month. Instead of falling dairy net profit of 24pc, the Committee now predicts a fall of 60pc.

It also projects that by 2018, milk prices are 10pc lower than in 2017, but now expects a decline in milk supply by 1pcs 4pcs instead of increasing, due to the reduction of rates for feeding and culling of cows.

However, large changes in the projected increase in the cost of input 23pc due to the increased feed intake due to unfavourable grass growing conditions, rather than the more modest 6pcs to be held in December. As a result, he expects the income of the family farm on dairy farms will be reduced by 50pc this year.

On the cattle farms, the Committee has maintained its forecasts for moderate growth in the prices of cattle and production volumes. However, the increase in costs of purchased feed in connection with the difficulties feed into its projections an increase in 4–5pcs in a gross profit fall 12 per family income of the farm.

The Committee is now predicted increase in the price of lamb in 2018 compared to 2017, in contrast to the autumn of last December. Thus, despite the significant increase in sheep purchase feed, he now believes that the gross profit will be only marginally lower than in 2017, and that net profit will decline 8pcs.

For grain farms, great change comes not from the entrance, where the Committee has taken into account higher input prices, and the impact of abnormal weather on crop yield.

Although he warns that the final budget will depend on weather conditions during harvest, it now predicts a decline of 27pc paintball in General tonnage compared to 2017 and the reduction of 25pc in the income of the family farms to grain farms.

Putting these figures on the family farm income together — 50pcs fall on dairy farms, and 12 PCs to fall on breeding farms, 25pcs fall on tillage farms and 8pcs to fall on a sheep farm — it is clear that a General fall in aggregate farm incomes will be significantly higher than 8pcs drop projected by the Committee in December last year.

This fall in income from a high base, given that 2017 was a record, so it cannot be compared to the disastrous year in 2009. But the worry for farmers is that this trend will continue in the coming years.

There is uncertainty in the form of the British exit from the EU will be held in March next year and the growing likelihood that there will be higher production costs for exports to our most important markets. There are also possible consequences of a disorderly exit of UK pound-Euro exchange rate. Factor in the possible consequences of a trade war now underway, the President of trump and prospects of development of farm incomes in the near future, all in the red.

Alan Matthews Professor Emeritus of European agricultural policy at Trinity College Dublin

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