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November 19, 2008

 

Only 20 percent of Irish beef farms are economically viable
 
 

Only one fifth of the Ireland's 60,000 beef farms are economically viable businesses when the value of family labour and capital invested in livestock and machinery is considered.

 

That is according to Teagasc economists James Breen, Thia Hennessy and Fiona Thorne, who also claim in a medium-term outlook for beef, dairy and tillage farms that only 4,000 beef farms can be considered full-time commercial businesses.

 

James Breen said the reliance on de-coupled payments and other subsidies remains high with many beef farmers operating at a market loss.

 

The profit from production is negative when subsidies are discounted. In fact, only one-third of the gross output generated by beef farms in 2006 was at a market profit.

 

The outlook for beef profitability at the farm-level remains poor. It is projected that even under no policy change the percentage of viable businesses would decrease from 21 percent at present, to 10 percent by 2018, and the proportion of gross output produced at a market profit would decrease from 32 percent to 20 percent.

 

Fiona Thorne said the review of the current status of the tillage farming population shows that 76 percent of specialist tillage farm businesses are economically viable businesses in 2008.

 

It is estimated that this figure will reduce to 66 percent of producers by 2018 assuming no policy change.

 

Dairy farmers, according to Thia Hennessy, are having a poor year following the high of 2007 with the number of economically viable farm businesses declining from 68 percent in 2007 to 53 percent in 2008.

 

The current price cost squeeze is expected to continue into the medium term and the number of dairy farms will continue to decline between now and the time of milk quota abolition, she said.

 

According to the outlook, the effect of a WTO (World Trade Organisation) agreement where beef is not a sensitive product is particularly severe for the sector. By 2018, beef prices are projected to be almost 30 percent lower due to the agreement.

 

At these prices less than 4 percent of the gross output generated by the current population of beef farmers would be profitable. This equates to 6 percent of beef farms being viable in 2018.

 

A scenario where beef is designated as a sensitive product still has negative impacts, but the outcome is not as extreme. Here the percentage of economically viable beef farms in 2018 is 9 percent compared to 10 percent under a no policy change scenario.

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