MORE THAN half a billion euro was invested in farms last year despite the recession and little availability of credit, a conference on economic trends in agriculture heard yesterday.
The relatively good outlook for the farm sector was discussed at the conference organised by the farm advisory body, Teagasc.
The 40 per cent increase in farm income in 2010 though had to be seen against the background of two very bad years. Moreover, it would probably be 2012 before investment on farms would exceed the half a billion level, Thia Hennessy, of the agri-economics and farm survey department of Teagasc, said.
She expected this level of investment to continue at the same level this year as returns from farming improved.
“Traditionally the debt ratio on farms in Ireland has been 1.5 times income but in the ’07 to ’09 period, it increased to three times income, but that is falling back,” she told the conference on the Economic Prospects for Agriculture in the Heritage Hotel, Portlaoise.
In 2009, 15 per cent of dairy income was spent on paying interest charges, which meant people had been reluctant to borrow.
While she and Dr Cathal O’Donohue, head of the Teagasc Rural Economy and Development Programme, said 2011 was likely to be a good year for farmers with output values up for all sectors, it was also noted that higher inputs would affect incomes this year.
Predicting a positive outlook for 2011, Ms Hennessy said the outlook for milk prices looked good but increasing fertiliser and concentrate feed prices were likely to dampen some of the increased returns from a better market.
A sectoral preview of this year predicted a good outlook for cattle prices and annual average prices were expected to increase by 5 per cent but this would not be sufficient to offset rising input costs.
Lamb prices, which increased by 17 per cent last year, were likely to rise again this year. It was difficult to predict what would happen in 2011 following bumper yields and prices cereal farmers experienced in 2010, but the outlook was generally positive.
Fertiliser prices were expected to rise and for the majority of tillage farmers, this would leave farm incomes down slightly for 2011. Only spring crops were likely to produce profit margins similar to last years.
The only black spot on the farming scene was in the pig sector, where there was an increase in feed prices from €233 a tonne last summer to €304 a tonne this month.
This had increased the monthly feed bill on pig farms by €5.7 million, according to Michael Martin, Teagasc’s pig specialist.
He said there was unlikely to be a recovery to a break-even point before June when an increase in pigmeat prices of between 10-15 per cent was likely to happen because of reduced EU supplies.
The conference, which was attended by more than 200 farmers, industry leaders and co-operative representatives, also addressed the issue of price volatility.