Farm Income - What Contributes to This

US - In March DARD published its "Statistical Review of Northern Ireland Agriculture" for 2007. According to a Livestock and Meat Commission (LMC) bulletin, the leading statement was that there had been a substantial rise in the income of Northern Ireland agriculture - Total Income From Farming (TIFF) had increased by 46% to £233 million, from £160 million in 2006.

12 May 2008

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However in the UK as a whole TIFF had only increased by 10%. So what has contributed to this huge increase in income in Northern Ireland?

The 2006 base line The 2006 base line from which the huge 46% percentage increase is calculated is now given as £160 million.When the provisional 2006 figures were published (News Release 030/07 dated 31 January 2007) TIFF was given as £190 million for the year 2006. At that time this was hailed as a 4.7% increase, but if the provisional figure has now been finalised at £160 million it represents an 11% decrease in TIFF from 2005 to 2006. A £30 million difference between the provisional and the final 2006 TIFF figure is a large inaccuracy in the provisional estimate.

What has increased income in 2007?

DARD states that the main reason for the increase in TIFF in 2007 was improved productivity. The second most important factor was improvement in milk and cereal prices, and the third factor was an increase in beef and milk production. It is worth noting that 36% of the increase in beef production was attributable to the continued increase in the number of cows going into the food chain. DARD does additionally point out that the positive impacts of these factors were off-set by a large increase in feed costs.

Direct Payments

Direct payments are included in TIFF. Please note these are referred to as direct payments and not as subsidies because they are payments to farmers for providing public goods for which there is no reward in the market place. The direct payments are detailed in the table below. In 2007 the total of direct payments was £275 million. As TIFF only came to £233 million, it means that production agriculture made a loss of £42 million. The net effect is that the SFP in particular is being used to 'subsidise' production at low market prices, although in 2007 the loss from production agriculture was much reduced compared to 2006.

Not the whole loss

TIFF does not include the costs of the manual and management labour provided by farmers, spouses, family, partners and directors, nor the costs of their own capital invested. The return for these costs all has to come out of TIFF. At £233 million TIFF for 37,552 farmers, spouses and partners this represents £6,200 per farmer/spouse/partner to cover these costs.This is a long way from being an economic return for these inputs.

Direct Payments (£ million)	2006	2007 (Provisional)
Single Farm Payments	226.0	231.1
LFA Compensatory Allowance	21.0	20.7
Countryside Management Scheme	10.2	12.4
Environmentally Sensitive Areas Schemes	4.8	5.0
Over Thirty Months & Older Cattle Disposal Schemes	7.7	4.2
Organic Farming Scheme & other misc payments	0.5	0.6
Total Direct Payments	270.8	274.7
Total Income From Farming	159.6	233.0
Production Agriculture Loss	111.2	41.7

LMC's conclusions from the Statistical Review are that income from farming is entirely dependent on direct payments, particularly the Single Farm Payment, and that the income recorded for 2007 is insufficient to provide a proper economic return to farmers for their land, labour and capital inputs.