Farm incomes increase buoyed by high food prices

FARM INCOMES rose by 12 per cent last year buoyed by high food prices and better export markets especially in Asia, according to the Department of Agriculture’s annual review.

The global shortage in commodities, which has resulted in rising food prices, saw cereal farmers’ incomes increase by nearly 70 per cent last year.

However, the bad summer last year meant that farmers were not able to benefit as much as they could have done from escalating prices and volumes were down slightly on other years.

The booming dairy sector also benefited hugely from rising food prices. Dairy farmers received 34 cent a litre for their milk last year, a rise of 29 per cent on the previous year.

However, the boom in farm incomes did not translate into substantially higher food prices which only rose by 2.8 per cent last year, below inflation of 4.9 per cent.

The biggest increases, though, were in common foodstuffs with beef increasing by 5 per cent, milk by 7.4 per cent and fresh vegetables by 7.4 per cent.

The figures mean that food prices have escalated this year and now stand at 14 per cent above May 2007. Food prices in Ireland remain the second highest in the EU at 25 per cent more expensive than the European average.

Escalating food prices globally this year have been partially blamed on demand in China and India especially for meat and dairy products.

However, they have also led to a boom of Irish food exports to Asia which increased by a “phenomenal” 50 per cent last year, according to Department of Agriculture figures.

Bord Bia has now achieved its strategy of doubling food exports to Asia to €400 million two years ahead of schedule.

The biggest beneficiary has been the dairy industry which now accounts for 70 per cent of the €400 million worth of exports to Asia last year.

IFA president Pádraig Walshe welcomed the rise in farm incomes and said dairy farmers, in particular, were entitled to a boost in incomes after 10 years of losses in the sector.

However, he also said that increases did not take into account that other sectors of the agriculture economy were struggling.

Income levels for pig farmers decreased by 9.7 per cent and beef farmers were squeezed by falling demand and South American imports with a decrease in income levels of 1.7 per cent.

There was also a small decrease in the income of poultry suppliers.

Mr Walshe said pig and poultry producers were squeezed between supermarkets and rising feed costs.

The outlook, though, for beef farmers is much better this year with an estimated increase of 20 per cent in cattle prices because of a shortage of beef in the EU and a dramatic fall off in imports from Brazil because of health and safety issues.

In total agricultural exports rose by an estimated 5 per cent last year to €8.6 billion accounting for 7 per cent of GDP, 8 per cent of employment and 10 per cent of exports.

Minister for Agriculture Brendan Smith described the export performance as an “excellent result”.

“Significant progress has been achieved in the face of stiff trading competition, rising energy costs and the strengthening of the euro against the dollar and sterling.”