In what is being interpreted as a sign of confidence in the industry, Irish farmers plan to invest more than €1.1 billion on their farms next year, a conference in Tullamore, Co Offaly, heard yesterday.
However, there is unlikely to be major investment in sheep farms as the number of flocks has declined by one-third since 1993 and the breeding flock size has fallen by 1.27 million since 2000.
The new investment figures were revealed when top agricultural scientists from Teagasc met for the Situation and Outlook in Agriculture 2007/08 conference, where the specialists analyse the latest figures from their sectors.
Teagasc economist Liam Connelly said a survey carried out by the agriculture and food development authority this autumn showed that more than 32,000 farmers planned to invest an average of €34,500 on their farms next year.
The research showed that farm buildings accounted for 80 per cent of investments at €912 million or 81 per cent of total investment and this, he said, was a decline of €36 million on 2007 figures. Dairy farmers accounted for the bulk of planned investment, 54 per cent in 2008 and 48 per cent in the current year and cattle systems accounted for 26 per cent in 2008 and 31 per cent in 2007.
"For many reasons actual farm investment seldom turns out as planned, and 2007 was no exception in that the actual investment by farmers in 2007 was higher than planned and farmers actually invested a total of €1,390 this year when their planned investment for the year was €1,154," he said.
While the story of incomes on farms this year was a mixed one, according to Prof Gerry Boyle, director of Teagasc, he said the improved incomes in the dairy and cereals sectors were welcome. But he had to acknowledge more difficult market situations on beef, sheep, pig and poultry farms.
Dealing with sheep, Anne Kinsella said the decline in the national flock was not only continuing but accelerating down to 35,277 flocks in 2006, a 33 per cent decline since 1993.
While sheep numbers continued to fall, there was no evidence of consolidation or a shift to larger commercial flocks because 44 per cent of flocks had less than 50 ewes, while the number of large flocks fell slightly and since 2000, the breeding flock had fallen by 1.27 million ewes.
On the beef sector, Liam Dunne said the current year was the first time the decoupling of production from direct payments was fully released from the knock-on impact on the market and with it came a decline in cattle prices which he estimated would be 10 per cent this year.
The current position in cattle farming is in stark contrast to the buoyancy in both dairying and cereal enterprises, where unprecedented price increases now prevail. Continuing turbulence in commodity prices and exchange rates made forecasting particularly problematic but prices could go back to 2006 levels.
On dairying, Thia Hennessy reported an average profit level from a litre of milk this year should rise to 13 cent, an 85 per cent increase on last year. The outlook for next year remained good albeit not as good as 2007 as world prices have started to fall.
On tillage, it was predicted there would be a reduction in Irish cereal prices of 20 per cent and gross margins per hectare could fall to 2006 levels.