Average farm income increased by about 50 per cent between 1991 and last year, the Minister for Agriculture said.

But Mr Walsh added that farm income had declined last year, mainly because of price falls across most agricultural commodities. "This was very disappointing, particularly in view of the good performance of incomes over the previous five years."

Speaking during a special debate on agriculture, Mr Walsh said more than half of farm household income was derived from off-farm sources. Direct income payments made to farmers had continued to increase throughout the 1990s and, in 1997, reached a record £940 million, which was 48 per cent of farm income or 25 per cent of farm household income. This represented an increase of more than 132 per cent since 1992.

"We can therefore see that off-farm employment and other earnings, social welfare payments and direct agricultural payments now together accounted for about three-quarters of the income coming into farm households.

"All of these elements of income have been increasing in recent years, including this year. The difficulty this year centres around one-quarter of farm household income that comes from agricultural operations."

This summer's unusually wet weather, combined with below normal sunshine levels, had reduced grass growth in many areas, Mr Walsh said.