Fall in incomes a wake-up call: UFU

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The Department of Agriculture, Environment and Rural Affairs (DAERA) has published the first estimate for farm incomes in 2018.

The initial figures indicate that the ‘Total Income from Farming’ (TIFF) in Northern Ireland fell by 23% (24% in real terms) from £467 million in 2017 to £360 million in 2018.

That has come as no surprise to the Ulster Farmers’ Union, with president Ivor Ferguson, describing the income report as “disappointing”.

He added that with just weeks to go until Brexit the figures underline the continuing dependence on direct support for agriculture.

“Despite the lack of firm decisions on future support arrangements these figures must be a wake-up call that these cannot be indefinitely delayed,” said Mr Ferguson.

The UFU says that the 24% year-on-year farm income drop needs to be seen in the context of there being less money available for farmers to invest or spend in their local community.

“Even with all the changes we have seen in rural areas their financial fortunes still ebb and flow with the success or otherwise of agriculture,” said the UFU president.

According to the union, the DAERA figures confirm that despite continuing general growth in both quantity and price of outputs, farmers are being hit by rising costs for all inputs. Feed makes up 55 per cent of the bill as costs there rose by 13 per cent.

“This is the other side of the coin of price gains from the weakening of sterling. Most inputs such as feed, chemicals, fuel and fertilisers link back to euro or US dollar prices. These increases and higher labour costs are putting a squeeze on margins when incomes are just about static,” said Mr Ferguson.

There has also been a reduction forecasted in average farm business incomes for 2018/2019 but the UFU says it is particularly concerned about the plunge in incomes in both hill and lowland beef and sheep production.

“This is a threat to the very backbone of agriculture. If farmers are unable to cover rising input costs its future is in doubt. That would be a massive blow to the industry. Tacking this issue must be central to whatever new farm support structures are put in place after Brexit,” said the UFU president.

The UFU says the harsh reality of the figures is an industry squeezed by static returns and rising costs, with its future uncertain.

Mr Ferguson concluded: “Look behind these and, of the £360 million total income, £286 million was made up of direct support from Brussels through the CAP. That is why decisions on how this will be replaced after Brexit cannot be allowed to drift even further.”

TIFF represents the return on own labour, management input and own capital invested for all those with an entrepreneurial involvement in farming. It represents farm income measured at the sector level.

Total Gross Output for agriculture in Northern Ireland was 1% higher at £2.13billion in 2018. There was a 2% increase in the value of output from the livestock sector, while field crops rose by 3% and horticulture was 5% lower. These figures are for the calendar year and therefore they represent the outturn across two harvest years.

The total value of Gross Inputs increased by 8% in 2018, to £1.58billion. Specifically, feedstuff costs, which accounted for 55% of the total Gross Input estimate, rose by 13% to £867million in 2018.

Dairying remains the largest contributor to the total value of Gross Output at £680million in 2018; a rise of 3%. Between 2017 and 2018 the volume of raw milk produced in Northern Ireland increased by 3% to 2.3 billion litres.

The output value of cattle was 1% higher at £467million in 2018. The total number of animals slaughtered increased by 2% in 2018, whereas, the average carcase weights for both clean and cull animals were 1% higher. These increases resulted in the volume of meat produced being 2% higher in 2018.

The value of output from sheep increased by 8% to £78million in 2018. The total number of sheep slaughtered decreased by 2% in 2018 whereas the average carcass weight remained unchanged at 22 kilograms. This resulted in the volume of sheep meat produced being 2% lower in 2018.

In addition to the changes in meat volumes and prices there was also an upward movement in stocks that contributed to the increased output value for 2018.

There were increases in the values of output in two of the three intensive livestock sectors during 2018, with the poultry sector improving by 5% to £281million and the egg sector growing by 3% to £107million. The value of pig output reduced by 5% to £159 million. All three sectors recorded an increase in production volumes, with eggs up by 7%, poultry up by 4% and pigs up by 3% compared with the previous year.

The total output value for field crops increased by 3% in 2018 to £66million. This was as a result of increases in the prices for barley, wheat and oats. Values across a calendar year reflect two harvests. The value of output of potatoes in 2018 decreased by 9% to £21million. This was due to a decrease in potato production as a result of both lower area grown and lower yield achieved in 2018. The value of output for barley increased by 24% to £22million and the output value of wheat decreased by 20% to £9million.

The estimated value of the 2018 direct subsidies (Basic, Greening and Young Farmer payments) was £286million, representing a decrease of 0.6%, when compared with the 2017 payments. This means that direct subsidies from the EU accounted for 80% of the total farm income generated in Northern Ireland during the last calendar year.

The Ulster Farmers’ Union (UFU) says the drop in farm incomes in 2018 is disappointing, but does not come as surprise. Union president, Ivor Ferguson, said that with weeks to go until Brexit the figures underline the continuing dependence of direct support for agriculture.