An increase in the incomes of farmers in the last year has been welcomed by the Agriculture Minister Edwin Poots, however he sounded a note of caution over “rising input costs”.
Farm income increased sharply last year, driven largely by high demand and prices — but helped by unfettered access to both the GB and European markets, according to a leading agricultural economist.
Incomes may also have benefited from a move by stores towards more local sourcing of products.
However, rising feed, fertilizer, energy and other costs began to kick in late in the year, prompting a warning of future pain.
Mr Poots said it was “disappointing” most of the income gains were offset by the rise in costs, as he highlighted certain sectors of the industry facing additional challenges.
“Farm level estimates also show that not all farm types experienced an increase in incomes in 2021,” Mr Poots said.
"In particular, the incomes of pig farms are substantially down due to lower pigmeat prices and much higher feed costs during 2021.
"Like all farm sectors, the pig sector has faced market fluctuations before but the combination of both lower prices and rising costs has been very testing and I have been working with the sector closely and continue to monitor the situation.”
Provisional figures reveal that ‘Total Income from Farming’ (TIFF), essentially income after costs, increased by 8% in real terms from £463m in 2020 to £501m last year.
Total output for agriculture in Northern Ireland was 9% higher at £2.43bn in 2021, with an an 11% increase in the value of output from the livestock sector, while field crops increased by 34%.
Horticultural output, in large part mushrooms, was 9% lower, figures released by the Department of Agriculture, Environment and Rural Affairs (DAERA) reveal.
Dairying remains the largest contributor to the total value at £805m in 2021; an increase of 20% between 2020 and 2021. This is followed by cattle at £485m, 7% higher in 2021.
Farm income measured across all farm types is expected to increase from an average £34,402 in 2020/21 to £39,741 in 2021/22, a rise of £5,339 or 16% per farm.
Daera did not respond to a request for comment from the Belfast Telegraph.
Agricultural economist Michael Haverty, senior consultant with The Andersons Centre, the agribusiness consultancy, said the upward trends are also being seen in other parts of the UK.
It is largely driven by increased prices as there is less supply than demand, particularly for dairy products, Mr Haverty said. Dairy products sourced across the island were already increasingly attractive for some years prior to the onset of the pandemic, he added.
Global demand is also high, particularly in the Asia-Pacific region, which is dealing with outbreaks of African Swine Flu.
Costs increased by 10% in 2021, to £1.72bn. Feedstuffs increased by 14% to £958m, while fertilisers went up by 15% in 2021. However, there was a significant decrease in the amount purchased.
Much of that increase came in the late months of the year when many farmers had already purchased most of what they needed for the year.
“They dodged that one but the impact will be seen in 2022,” said Mr Haverty.
“Agricultural cost inflation will be a factor front and centre.”
The NI Protocol is having an impact as farmers have access to the single market in a way their counterparts in GB no longer have, Mr Haverty said.
"Overall the positive aspect of the protocol is that NI is enjoying unfettered access to the EU market — and to GB," he added. Figures already show large increases in food exports across the border, most destined for the European mainland.
Buyers sourcing locally, displacing what might have previously come from GB, has "moved the dial" but more data is needed, he said.
The estimated value of the 2021 direct payments — the Basic Payment Scheme, Greening Payment and Young Farmers’ Payment — was £308m, an increase of 4% from the previous year. Figures are based on farm accounts collected for the Northern Ireland Farm Business Survey.