Many farmers are still not sure how to react in their farming practices to the reforms of the Common Agricultural Policy due to come into effect on New Year's Day.
Farmers have told Teagasc researchers they expected to drop sheep numbers by 6 per cent next year and there could be a drop of up to 12 per cent in cereal plantings in the coming year when the link between EU payments and production are severed. Researchers were also told forestry plantings would increase, a conference heard last week.
Mr Liam Connolly, head of the National Farm Survey, said 2004 saw a small decline in farm income. Since 1995, income has declined by 23 per cent.
He said 1,100 farmers participated in the National Farm Survey and 85 per cent of them were in favour of full decoupling of farm supports from production across the main farming systems.
The investment plans by farmers for this year had fallen short of the predictions they made last year with a 9 per cent drop in planned investment in machinery and 23 per cent in buildings.
He said that while 61 per cent of dairy farmers said they would expand their dairy herds over the next ten years, 37 per cent said they would not expand or may exit the sector completely.
He said 14 per cent said they would get out of dairying within two years if the milk price fell below 22 cent/litre with another 32 per cent getting out in three to 10 years and 47 per cent remaining in for the long term.
When farmers were asked how much they intended to spend in farm inputs in the coming year, 54 per cent said they would spend the same amount of money, 3 per cent said they would increase spending and 42 per cent said they would reduce their inputs.
Mr Liam Dunne, of the rural economy research centre of Teagasc, said beef farmers would benefit from the overlap of direct payments next year when the old system was being phased out and the new Single Payment system came in. "This could result in a revenue injection of the order of €550 million next year," he said.
Ms Flora Thorne, of the rural economy research centre, said the high yields achieved in cereals this year which had helped economic performance despite lower grain prices, was unlikely to be repeated in the coming year.
Ms Anne Kinsella, Teagasc Athenry, said that while gross margins in sheep production would show a slight increase next year, the decoupling of subsidies was likely to have a dramatic effect on hill sheep production.