21 November 2024
Economic sustainability of upland farms in a precarious position
Dr Emma Dillon, Economist and Senior Research Officer in the Teagasc Rural Economy & Development Programme, provided food for thought on the economic and social dynamics of upland farm at the Uplands Symposium, an event jointly organised by Teagasc and CAFRE on November 12.
For the purpose of her presentation, Dr Dillon limited the National Farm Survey’s dataset to just mountain hill farms, allowing her to present data representative of 3,700 upland cattle farms (excluding dairy) and 4,400 upland sheep farms.
Upland farms weren’t immune to the price and output volatility challenges witnessed over recent years, with Dr Dillon noting that this resulted in a decline in family farm income and an increased reliance on direct payments, particularly over 2023.
“In 2023, upland farms had an average family farm income of around €12,500 and direct payments of approximately €22,000. We know for many of these farms, it is costing them to remain in existence. They are utilising about €10,000 of the direct payment just to stay farming.
“The portion of direct payments as family farm income is very much upward and it was about 180% in 2023. We have seen volatility year on year, but we can see the direct payments are relatively more important on those upland farms versus the non-upland farms,” Dr Dillon said.
Social dynamics
The social demographics of these uplands farms were also explored, with Dr Dillon highlighting the uncertainty that the aging profile of farm operators and smaller household size brings.
A growing dependency on off-farm income – earned by the farm holder or their spouse – in supporting upland farm households was also discussed. Of the upland farms included in the dataset, 45% of farm holders were in off farm employment in 2023, while 35% of their spouses worked off farm. Additionally, more than one-third of households were in receipt of a pension in 2023 – a reflection on the aging population.
Dr Dillon noted: “In recent years, we have seen that off-farm income is increasingly becoming a diversification strategy to buffer against low productivity and high costs.”
Household size was also examined as an indicator of demographic viability. Dr Dillon added: “Household size of upland farms is smaller, indicating that the household is older than on non-upland farms, which may have young members of the household.”
This followed through in demographic viability, defined as a farm where the farm operator is aged >60 with no household member below 45.
“Demographic viability is trending downward on upland farms,” Dr Dillon explained, “reflective of that aging household profile. Worryingly, when there is no household member below 45, challenges around succession may arise on upland farms.”
Economic viability
The National Farm Survey defines a farm as being economically viable if the farm income is sufficient to remunerate family labour at the minimum wage and also provide a 5% return on their non-land assets.
From the dataset of upland farms examined, Dr Dillon noted that 20% of upland cattle farms were deemed to be viable, 41% were sustainable – the farm business isn’t viable, but the household is sustainable due to the presence of an off-farm income – and 39% were vulnerable
The sheep situation presented was more stark; 15% of upland sheep farms were viable in 2023, 45% were sustainable and 40% were vulnerable.