Who will be farming our land in the coming decades and what will they be doing with it?
That was the conundrum being teased out this week as Teagasc released the findings from its 2024 National Farm Survey.
The research offered a comprehensive window into the statistics and financials behind the running of nearly 90,000 farms – out of around 130,000 – in Ireland.
The analysis from the State agency responsible for agriculture and food development excluded 47,000 or so of the smallest farms in the country, which are surveyed separately.
But it still covered the vast majority – 96% – of Ireland’s agricultural output.
The report’s top line findings are welcome news for farmers, showing a substantial recovery in family farm incomes across all types of farming last year.
It stated that the average family farm income rose by 87% to just under €36,000.
Sheep farm incomes increased by 115% to €27,796, while dairy incomes also more than doubled – increasing by 113% to €108,189.
Incomes in the tillage sector also rose, up 101% to €38,685.
Judging by this, a person could be forgiven for thinking farmers’ earnings are robust but upon deeper inspection of the data, it is clear it is not that simple.
In its findings, Teagasc noted the significant income rises followed an especially bad year in 2023, so they were working off a low base.
Overall average farm incomes for last year were still considerably lower when compared with 2022 – €46,313 in 2022 vs €35,937 in 2024.
The term ‘average’ was being used in regard to these numbers quite a bit, however, averages can be misleading.
For example, last year nearly one in five family farms surveyed by Teagasc had an income below €5,000.
A further 16% earned less than €10,000 and just over half had an income below €20,000 – well short of the headline average income of €35,937.
Incomes higher for dairy, but so is volatility.
Dairy leads the way in terms of profitability and accounted for over half of the income generated on all types of farms last year.
Despite this, volatility is a huge worry for dairy farmers.
The National Farm Survey showed an upward trend in the average dairy farm income over the last decade, but it also clearly showed these incomes have become increasingly volatile.
Volatility in milk prices over the last decade has been very pronounced, with the annual average milk price in 2022 more than double the 2016 price.
At the same time, input costs for dairy farmers have surged since 2021, with labour costs a big driver.
According to the Teagasc study, dairy farms are now the sector most reliant on unpaid family labour – 1.43 labour units vs an average of one unit across all farm types.
Meanwhile, cattle and sheep farms have their own issues.
Their average incomes per hectare are just around a third of that of dairy, with overhead costs much higher relative to the value of their output.
Direct payments are vital to many farms’ survival.
This body of research also highlighted the “important contribution” direct payments make to farm incomes across the board.
In many cases, these support payments – coming either directly from the Government or indirectly from EU funding – are the difference between survival and having to shut up shop.
According to Teagasc, average incomes for cattle and sheep farms – before direct payments are factored in – remained negative, “emphasising the dependence of those systems on such financial support”.
The average direct payment on cattle rearing farms in 2024 was €17,927, with a family farm income of €13,547.
The typical suckler farm therefore used €4,380 of those payments during the year to cover the farm’s operating loss.
In his assessment of the numbers, Irish Farmers’ Association President Francie Gorman pointed to the need “to ensure that the CAP budget is protected and increased within the next EU budget”.
The EU is in the midst of agreeing its next budget, with farmers fearing their ringfenced funding could be dissolved into one bigger EU fund.
Mr Gorman said: “Direct payments still constituted 84% of tillage farm income (in 2024), over 100% of sheep farm income and over 130% of suckler farm income.
“That is why it is essential that our Government, and in particular our Minister for Agriculture, do everything in their power to ensure the CAP budget is ringfenced and increased as part of the next overall EU budget.”
Given the above data, it should not be much of a surprise that the Teagasc survey deems just 42% of Irish family farms to be economically viable.
Although this figure is up from 27% in 2023, it again just goes to show the high level of volatility with farm economics from one year to the next.
A farm is defined as economically viable if its income is sufficient to remunerate family labour at the minimum wage in 2024, which is assumed here to be €22,860 per labour unit.
It also must provide a 5% return on the capital invested in non-land assets, such as machinery and livestock.
A further third, or 34%, of farms are deemed to be ‘sustainable’.
These are farms considered not to be economically viable, but which have an off-farm income source within the household – such as either the farmer or spouse being employed off-farm – that help to stop the farm from dropping into the red.
This is the reality for a growing number of farms.
They need to have an off-farm income to help make ends meet.
Teagasc noted that drystock farmers are the most likely to work off-farm.
In 2024, on average 48% of operators on cattle rearing farms worked off-farm, while it was 43% for sheep farms and 49% for the tillage system.
Although a much lower proportion of dairy farmers – 11% – work off-farm, 55% of dairy farm households have an off-farm employment income – a high proportion of spouses work off-farm in dairy farm households.
There is one more category and it is a worrying one for farmers … ‘vulnerable’.
A farm is deemed vulnerable if it is operating on a non-viable basis and if neither the farmer nor spouse has an off-farm job.
Nearly a quarter of all farms, or 24%, fall into this category, and for sheep and cattle rearing farms the figure is closer to a third.
The figures also show that more than a third, or 36%, of farm households were in receipt of a pension income last year.
A pension is not an ideal or recommended funding method for a business, but this trend is also reflective of another major issue facing Irish family farms – the ageing working population and the challenge of generational renewal.
The average age of the Irish farmer is 59 and with the stark economic reality highlighted above, it is getting increasingly harder to encourage the next generation to take over the family farm.
With increasing income volatility, more regulation and growing uncertainty, farming is understandably not seen as an attractive prospect for younger people.
The President of the Irish Creamery Milk Suppliers Association, the group representing around 16,000 dairy farms, said high debt levels (€150,000 for an average dairy farmer), the increasing cost of environmental challenges and the workload means “young people are voting with their feet and walking away from farming”.
“You look at future investment on farms for the new regulations that will come and the farmer is probably working up to 70 hours a week, so unfortunately it’s not an attractive sector,” Denis Drennan said.
“Generation renewal is a huge issue and a major challenge to the sector,” he added.
The Government has put together a taskforce to deal with generational renewal and it is due to deliver initial proposals in the coming weeks.
IFA Farm Family and Social Affairs Committee Chair Teresa Roche said that with under 5% of farmers under 35 years of age, and 37% over 65, agriculture is “in crisis”.
She said a plan on generational renewal is needed urgently.
In its submission to the taskforce, the IFA emphasised “key challenges such as access to land, financial support and the burden of regulatory requirements, which often discourage younger generations from taking up farming”.
According to the IFA, “there is no one measure that can encourage more young people into agriculture – but rather a combination of factors”.
Meanwhile, President of the Irish Cattle and Sheepfarmers’ Association Sean McNamara pointed out that “the absence of a dedicated retirement or succession scheme for decades has created a severe bottleneck in land mobility”.
His association represents a cohort of farmers that the Teagasc study suggested are among the most vulnerable.
Mr McNamara said: “There is a major block preventing younger farmers from entering the sector.
“Older farmers are holding onto land because they have no financial security if they step back.
“This has created a major barrier to land mobility and farm succession.”
The concerns of the various farming organisations on the future of farming, as well as the findings from the Teagasc 2024 National Farm Survey, bring the question posed at the outset into sharp focus: Who will be farming our land in the coming decades and what will they be doing with it?
It is clear that if nothing changes on the policy front, fewer younger people will enter farming and older farmers nearing the end of their working lives will have some tough decisions to make as to what happens next to their business and if it will remain as an active farming operation.
Other countries, notably the United States, focus on large-scale industrial farming.
Thus far, Ireland has gone a different direction with the family-run farm, keeping livestock in their natural environment for the most part and embracing traditional methods of farming.
This has been a unique selling point globally for Irish food and drink produce, but the question now is how far we are willing to go as a country to maintain this tradition.
