New family farm income figures show that direct payments to farmers last year from EU and national sources accounted for 59 per cent of the average income, which was estimated to be £10,920.
This figure, according to the Teagasc National Farm Survey, was down 2.6 per cent on 1995 and reflected the fall in incomes caused by the BSE crisis in that year.
While one-third of farms surveyed had an income from farming in excess of £10,000, there was a wide disparity in the distribution of incomes.
They ranged from an average of £1,800 per farm on the smaller farms involved in cattle to an average of £58,000 on large specialist dairy farmers.
The highest income was derived from dairy farms over 200 acres where incomes averaged £42,000 in both the dairy and tillage areas. Large tillage farmers averaged £40,700.
Farms below £5,000, that is 52 per cent of farms surveyed, were mainly involved in non-rearing cattle systems, where cattle are born on one farm and reared by another farmer. Sheep farmers benefited from the BSE crisis and their income increased by 24 per cent, but the remaining systems in farming showed an income decline.
The survey found that dairy farmers had an income drop of 5 per cent, tillage farmers suffered a drop of 15 per cent and cattle farmers who were not rearing their own animals had an income decline of 2 per cent.
The survey found that the income of beef farmers fell by £100 million but the substantial build-up of cattle tended to mask the fall in cash flow. On direct payments, the survey found that they made up 100 per cent of income, on average, in all drystock systems, the first time this has happened in cattle rearing systems.
The authors of the report said that direct payments can actually exceed income whenever market price is not sufficient to cover total costs. On direct payments the report said that in 1992, the last year pre-CAP reform, direct payments, commonly known as "envelope farming" accounted for just over 30 per cent of average family farm income.