• AgriBenchmark: Benchmarking Sustainable Nutrient Management on Irish Farms

      Murphy, Paul N.C.; Thomas, Ian; Buckley, Cathal; Kelly, Edel; Dillon, Emma; Hennessy, Thia; Environmental Protection Agency (2020-10-14)
      AgriBenchmark explored the possibilities for benchmarking of nutrient management performance on Irish farms. Teagasc National Farm Survey (NFS) data (2008–2015; 1446 farms) were used to characterise and explore the potential for improvement of farm nutrient management performance and resultant aspects of environmental and economic sustainability through the derivation of three key performance indicators (KPIs) at the farm-gate level: farm nutrient balance (kgha–1), nutrient use efficiency (NUE; %) and profitability (gross margin; €ha–1). In this report, the farm nutrient balance is defined as the farm-gate nutrient imports (fertiliser, feed, animals, etc.) minus the exports (animals, crops, wool and milk). A positive balance (surplus) is considered to represent a nutrient source pressure in terms of the risk of nutrient losses to the wider environment. The data and analyses in this report cover the main, more intensive agricultural systems in Ireland (excluding pig and poultry farms) and are representative of, on average, 61% of farms nationally and 76% of the total utilised agriculture area (UAA; excluding commonage).
    • The capacity to expand milk production in Ireland following the removal of milk quotas

      Lapple, Doris; Hennessy, Thia (Teagasc, 2012-12)
      Given the imminent removal of milk quota in 2015, EU dairy farmers will be able to expand production without purchasing milk quota rights for the first time in 30 years. This paper uses Irish National Farm Survey data to simulate the expansion capacity of Irish dairy farms. Specifically, the likelihood of achieving the 50% increase in production target published in the Irish Government’s Food Harvest 2020 Report is explored. Potential milk output is estimated accounting for structural change and the economic viability of production under three price scenarios for 2020. In addition, the number of new entrants that would be required to meet the 50% target is calculated. The results indicate that the 50% output volume growth target set in the Food Harvest report will be difficult to achieve and that future potential milk output depends importantly on the rate of structural change and productivity growth as well as on real milk prices in 2020. A regional analysis reveals that relative to other regions, the south has the greatest expansion capacity. This suggests that quota removal could cause significant regional restructuring of milk production, which is likely to present some challenges to the dairy processing sector.
    • Developing farm-level sustainability indicators for Ireland using the Teagasc National Farm Survey

      Ryan, Mary; Hennessy, Thia; Buckley, Cathal; Dillon, Emma; Donnellan, Trevor; Hanrahan, Kevin; Moran, Brian (Teagasc (Agriculture and Food Development Authority), Ireland, 2016-12-30)
      In the context of an expanding, export-dependent agri-food sector, indicators of sustainable development and intensification are necessary to measure, assess and verify the comparative advantage afforded by Ireland’s natural pastoral-based food production systems. Such indicators are also necessary to ensure that we produce more food with less adverse impacts on the Irish environment, climate and society. This article outlines the development of farm-level indicators that refect the multifaceted nature of sustainability, which is encompassed in economic, environmental and social indicators. The role of innovation in farm sustainability was also examined. A comparison of indicators across Irish farm systems showed that dairy farms, followed by tillage farms, tended to be the most economically and socially sustainable farm systems. In relation to greenhouse gas emissions in particular, the top-performing dairy farms, in an economic sense, also tended to be the best-performing farms from an environmental sustainability perspective. This trend was also evident in relation to the adoption of innovative practices on farm, which was found to be strongly correlated with economic performance.
    • Does the single farm payment affect farmers’ behaviour? A macro and micro analysis

      Howley, Peter; Breen, J.; O'Donoghue, Cathal; Hennessy, Thia; European Commission; QLK5-CT-2000-00473; SSPE-CT-2005-021543 (Institute of Agricultural Management, 2012-10)
      Using Ireland as a case study, the overall aim of this paper is to determine if decoupled payments affect farmers’ behaviour. Using a dynamic, multi product, partial equilibrium model of the EU agricultural sector, this paper first compares levels of production that would be expected if decoupled payments had no impact on farmers’ activity with actual observed outcomes. Second this paper compares cereal and cattle farmers’ profitability prior to decoupling with that observed after the introduction of decoupled payments. The analysis presented here would suggest that decoupled payments do still maintain a significant effect on agricultural activity with farmers using this new form of support to partly subsidise unprofitable farm production.
    • An economic analysis of the Irish milk quota exchange scheme.

      Hennessy, Thia; Lapple, Doris; Shalloo, Laurence; Wallace, Michael (Institute of Agricultural Management, 2012-03)
      In Ireland, the trade of milk quota is subject to regional restrictions and a large variation in quota prices between regions has caused some controversy. This article investigates this issue by analysing the functioning of the Irish milk quota exchange market. For this purpose, the economic value of milk quota is estimated using an optimisation framework. The estimated values are then compared to milk quota prices paid at the exchange market. The analysis reveals that quota is undervalued in the border, midlands and west and south-west regions, while milk quota is overvalued in the east and south regions. This implies that farmers in certain regions overpay for additional quota, while other farmers secure good value for their quota investments. The paper concludes by discussing that the identified regional differences are only partly explained by economic and production factors.
    • The effect of decoupling on farming in Ireland: A regional analysis

      Shrestha, Shailesh; Hennessy, Thia; Hynes, Stephen (Teagasc, Oak Park, Carlow, Ireland, 2007)
      Data from the Irish National Farm Survey and Census of Agriculture were used to analyse the regional implications of the decoupling of direct payments for farmers in Ireland. A mathematical programming model was used to estimate the regional effects of decoupling while a micro-simulation model was exploited to map the geographic distribution of decoupled payments. The results show that under the historical decoupling scheme, milk quota will shift from less efficient to larger more efficient farms in all regions. Beef cattle numbers are projected to decrease on all farms, with the exception of the Mideast and Southeast regions where numbers are projected to increase. The regional effect of decoupling on sheep farming was marginal with all regions projected to benefit from the policy change. The analysis also shows, using a static micro-simulation model that a shift to a flat rate national calculation of the decoupled payment would result in a significant movement of revenues from the southern regions to the northwestern regions of the country. In particular, large beef and dairy farmers in the southern regions would lose out while small dairy and sheep farmers in the western and northern regions would be most likely to gain.
    • An Examination of the contribution of off-farm income to the viability and sustainability of farm households and the productivity of farm businesses

      Behan, Jasmina; Carroll, James; Hennessy, Thia; Keeney, Mary; Newman, Carol; O'Brien, Mark; Thorne, Fiona; Department of Agriculture, Food and the Marine, Ireland (Teagasc, 01/01/2007)
      The number of farm households in Ireland participating in the off-farm labour market has increased significantly in the last decade. According to the National Farm Survey (NFS), the number of farm households where the spouse and/or operator is working off-farm has increased from 37 per cent in 1995 to 58 per cent in 2007. The important contribution of non-farm income to viability of farm households is highlighted in the results of the Agri-Vision 2015 report, which concluded that the number of economically viable farm businesses is in decline and that a significant proportion of farm households are sustainable only because of the presence of off-farm income. Research conducted by Hennessy (2004) demonstrated that approximately 40 percent of farm households have an off-farm income and that almost 30 percent of the farming population are only sustainable because of off-farm income. Clearly, the future viability and sustainability of a large number of farm households depends on the ability of farmers and their spouses’ to secure and retain gainful off-farm employment. The Department of Agriculture, Fisheries and Food (DAFF) have recognised the importance of off-farm income to the sector and they have recommended that future policies focus on farm household viability in all its dimensions, including farm and off-farm income sources (2000).
    • An Examination of the Implications of Milk Quota Reform on the Viability and Productivity of Dairy Farming in Ireland

      Hennessy, Thia; Shrestha, Shailesh; Shalloo, Laurence; Wallace, Michael; Butler, Anne Marie; Smyth, Paul (Teagasc, 31/12/2008)
      The aim of the project was to produce quality, scientific based policy advice on the most efficient means for the transfer of milk quota between dairy farmers. The main objective of the project was to identify milk quota transfer mechanisms that would ensure the viability of the maximum number of farmers in Ireland while still supporting an internationally competitive agricultural sector. During the course of the project the Irish Department of Agriculture introduced a new milk quota transfer scheme. The milk quota exchange scheme was launched in November 2006. At this stage the objectives of the project were altered to be more policy relevant. Rather than exploring the efficiency of various milk quota transfer models, the aim of the project was redirected to explore the efficiency of the scheme as it was operated in Ireland. The rationale for this change was to provide relevant and timely feedback to policy makers on the operation of the new scheme. While the MTR agreement guaranteed the continuation of the EU milk quota regime until 2014/15, it also made provisions for a review of the milk quota system to be conducted in 2008. Clearly any changes to EU milk quota policy would have implications for farmers in Ireland. A second objective of this project was to explore some policy scenarios that may transpire from the milk quota review and to estimate the implications for farmers in Ireland.
    • Factors associated with profitability in pasture-based systems of milk production

      Hanrahan, Liam; McHugh, Noirin; Hennessy, Thia; Moran, Brian; Kearney, R.; Wallace, Michael; Shalloo, Laurence (Elsevier, 2018-03-07)
      The global dairy industry needs to reappraise the systems of milk production that are operated at farm level with specific focus on enhancing technical efficiency and competitiveness of the sector. The objective of this study was to quantify the factors associated with costs of production, profitability, and pasture use, and the effects of pasture use on financial performance of dairy farms using an internationally recognized representative database over an 8-yr period (2008 to 2015) on pasture-based systems. To examine the associated effects of several farm system and management variables on specific performance measures, a series of multiple regression models were developed. Factors evaluated included pasture use [kg of dry matter/ha and stocking rate (livestock units/ha)], grazing season length, breeding season length, milk recording, herd size, dairy farm size (ha), farmer age, discussion group membership, proportion of purchased feed, protein %, fat %, kg of milk fat and protein per cow, kg of milk fat and protein per hectare, and capital investment in machinery, livestock, and buildings. Multiple regression analysis demonstrated costs of production per hectare differed by year, geographical location, soil type, level of pasture use, proportion of purchased feed, protein %, kg of fat and protein per cow, dairy farm size, breeding season length, and capital investment in machinery, livestock, and buildings per cow. The results of the analysis revealed that farm net profit per hectare was associated with pasture use per hectare, year, location, soil type, grazing season length, proportion of purchased feed, protein %, kg of fat and protein per cow, dairy farm size, and capital investment in machinery and buildings per cow. Pasture use per hectare was associated with year, location, soil type, stocking rate, dairy farm size, fat %, protein %, kg of fat and protein per cow, farmer age, capital investment in machinery and buildings per cow, breeding season length, and discussion group membership. On average, over the 8-yr period, each additional tonne of pasture dry matter used increased gross profit by €278 and net profit by €173 on dairy farms. Conversely, a 10% increase in the proportion of purchased feed in the diet resulted in a reduction in net profit per hectare by €97 and net profit by €207 per tonne of fat and protein. Results from this study, albeit in a quota limited environment, have demonstrated that the profitability of pasture-based dairy systems is significantly associated with the proportion of pasture used at the farm level, being cognizant of the levels of purchased feed.
    • Hidden Underemployment Among Irish Farm Holders 1996-2011

      Loughrey, Jason; Hennessy, Thia (Agricultural Economics Society Annual Conference, 2013)
      This paper examines the factors driving hidden underemployment on Irish farms during the course of the economic boom in Ireland and the subsequent economic decline post 2008. This measure of hidden underemployment is due to differences between the farmer‟s reported amount of labour and the standard labour requirement estimated in the Teagasc National Farm Survey. Hidden underemployment can be attributed to a number of factors relating to inadequate employment situations as described at the 16th International Conference of Labour Statisticians (16th ICLS) such as low productivity, casual work practices and the poor utilisation of skills and other factors specific to agriculture and/or self employment. We place particular attention upon the potential role of off-farm labour supply in solving the underemployment problem. We use a two-stage residual inclusion model and a random effects probit model to examine the forces behind farm underemployment. This paper provides an interesting set of results given that the end of the economic boom phase co-incided closely but not precisely with the decoupling of farm-level subsidies in 2006.
    • Modelling the Effect of Policy Reform on Structural Change in Irish Farming

      Hennessy, Thia (Teagasc, 01/07/2007)
      The Mid Term Review (MTR) of the Common Agricultural Policy (CAP) has allowed for the decoupling of all direct payments from production from 2005 onwards; until then, most direct payments were coupled to production, requiring farmers to produce specific products in order to claim support. After decoupling, farmers will receive a payment regardless of production as long as their farm land is maintained in accordance with good agricultural practices. Direct payments to farmers have been an integral part of the CAP since the 1992 Mac Sharry reforms. Throughout the 1990s, market prices for farm produce have declined generally in line with policy while costs of production have continued to increase. Meanwhile, direct payments increased in value, increasing farmers’ reliance on this source of income. Furthermore, farmers adapted farming practices to maximise their receipt of direct payments, leading to the culture of ‘farming the subsidy’. By 1997, on cattle and tillage farms in Ireland 100 per cent of family farm income was derived from direct payments, meaning that on average the market-based revenue was insufficient to cover total costs.
    • Policy and Economic Change in the Agri-Food Sector in Ireland

      O'Donoghue, Cathal; Hennessy, Thia (The Economic and Social Review, 2015-06-22)
      In the agri-food sector, recent policy reforms such as the milk quota abolition and CAP reform as well as robust export growth have increased the sector’s visibility in public debate. In this paper we assess the economic characteristics of the sector and consider prospects for expansion. We also assess challenges to expansion, including land access, elderly age profile, the uptake of technologies, the financial strength of this sector, increasing price volatility and environmental constraints. The paper also highlights income challenges in terms of low viability rates that affect particularly the drystock sectors and the severe impact that the economic downturn has had on off-farm income. Also as the sector is highly influenced by policy, both in terms of regulation and in terms of impact of agricultural subsidies on total income levels, we consider the impact of recent CAP reforms.
    • The Potential of Farm Partnerships to Facilitate Farm Succession and Inheritance

      Leonard, Brian; Mahon, Marie; Kinsella, Anne; O'Donoghue, Cathal; Farrell, Maura; Curran, Thomas P; Hennessy, Thia; Royal Dublin Society; Teagasc Walsh Fellowship Programme (Institute of Agricultural Management, 01/05/2017)
      The rising average age of farmers and low level of young farmer entry is viewed as problematic on a global scale and farm partnerships are presented as a possible means by which farm succession and inheritance could take place in a timely manner. Using the example of Ireland, this research investigates a recent proposal by government to introduce a tax relief as an incentive for farmers to part take in farm partnerships. In this discussion, a hypothetical microsimulation model is used to investigate the possible outcomes of such a tax relief, with scenarios created to examine how this would materialise. It draws on the Teagasc National Farm Survey data which provides Irish data to the Farm Accountancy Data Network in the European Commission. The findings illustrate that even with a tax relief, cattle rearing farms would struggle to reap any economic benefit from entering a farm partnership, while their dairy counterparts would receive more value from tax reliefs. Results also indicate that farm viability will play a large role in whether or not collaborative farming is viewed as an option for farmers.
    • Predicted costs and benefits of eradicating BVDV from Ireland

      Stott, Alistair W; Humphry, Roger W; Gunn, George J; Higgins, Isabella; Hennessy, Thia; O'Flaherty, Joe; Graham, David A. (Biomed Central, 02/07/2012)
      Bovine viral diarrhoea virus (BVDV) causes an economically important endemic disease (BVD) of cattle in Ireland and worldwide. Systematic eradication by detection and removal of infectious (BVDV carrier) cattle has been successful in several regions. We therefore assessed the benefits (disease losses avoided) and costs (testing and culling regime) of a potential eradication programme in Ireland. Published bio-economic models of BVDV spread in beef suckler herds and dairy herds were adapted to estimate potential benefits of eradication in Ireland. A simple model of BVDV spread in beef finisher herds was devised to estimate the benefits of eradication in this sector. A six year eradication programme consisting of 5 inter-related virological and serological testing programmes is outlined and costed. We found that the annualised benefits of BVDV eradication in Ireland exceeded the costs by a factor of 5 in the beef suckler sector and a factor of 14 in the dairy sector. Corresponding payback periods were 1.2 and 0.5 years respectively. These results highlight the significant economic impact of BVDV on the Irish cattle industry and suggest a clear economic benefit to eradication using the proposed approach. This type of cost-benefit analysis is considered an essential prerequisite prior to undertaking an eradication campaign of this magnitude.
    • The role of investment, fundamental Q and financing frictions in agricultural investment decisions: an analysis pre and post financial crisis

      O'Toole, Conor M.; Newman, Carol; Hennessy, Thia; Teagasc Walsh Fellowship Programme (Teagasc, Oak Park, Carlow, Ireland, 2011)
      This paper uses a fundamental Q model of investment to consider the role played by nancing frictions in agricultural investment decisions, controlling econometrically for censoring, heterogeneity and errors-in-variables. Our ndings suggest that farmer's in- vestment decisions are not driven by market fundamentals. We nd some evidence that debt overhang restricts investment but investment is not dependent on liquidity or internal funds. The role of nancing frictions in determining investment decisions changes in the post- nancial crisis period when debt overhang becomes a signi cant impediment to farm investment. The evidence suggests that farmers increasingly rely on internal liquidity to drive investment. Finally, we nd no evidence that farmers use o -farm capital to fund on-farm investment.
    • The role of non-pecuniary benefits in the labour allocation decision of farmers.

      Howley, Peter; Dillon, Emma; Hennessy, Thia (Teagasc, Oak Park, Carlow, Ireland, 2012)
      Previous research has primarily focused on the impact of economic variables in explaining the off farm labour allocation decisions of principal farm operators. This study finds attitudes regarding the non-pecuniary benefits associated with the farming lifestyle also significantly affect behaviour by acting as a strong disincentive to farmers towards working off farm. This may suggest that even if economic returns are greater in the offfarm labour market, farmers may not supply additional labour off farm. We also employed separate models of off-farm labour market participation and off-farm labour supply and found certain variables such as a farm operator’s age and the level of diversification undergone by the farm business affect off farm labour market participation and hours supplied differently.
    • Seasonality and Costs of Production on Irish dairy farms from 1994-2008

      Smyth, Paul; Harte, Laurence; Hennessy, Thia (Teagasc, Oak Park, Carlow, Ireland, 2010)
      Previous research has highlighted the economic advantages of spring calving in countries such as Ireland that have a long spring/summer grazing season. However, the widespread adoption of such a production system leads to a highly seasonal milk supply and a range of problems that are associated with seasonality. The objective of this paper is to use historical data to quantify the economic benefits of a spring calving system. Data from over 400 dairy farms in Ireland over a period of 15 years is examined. Fixed, random and between effects panel models are estimated to test the significance of calving season on production costs. The results show the effect of calving season is significant at lowering production costs. These models returned results suggesting that high compact early Spring herds have significantly lower costs than over seasons. However the fixed effect model demonstrates little difference between production costs in different seasons suggesting individual effects such as the ability of the farmer may play a role in reduction of costs. Herds that are calved over a shorter period tend to have lower production costs.
    • Situation and Outlook in Agriculture 2008/09

      Breen, J.; Connolly, Liam; Donnellan, Trevor; Hanrahan, Kevin; Hennessy, Thia; Kinsella, Anne; Martin, Michael; Ryan, Michael; Thorne, Fiona (Teagasc Rural Economy Research Centre, 2008-12)
      CONTENTS: (1)Farm Incomes 2007; (2) Investment in Agriculture 2008/09: Dairying, Cattle, Sheep, Pigs, Tillage, Forestry
    • Study on the Functioning of Land Markets in the EU Member states under the Influence of Measures applied under the Common Agricultural Policy

      Donnellan, Trevor; Hanrahan, Kevin; Hennessy, Thia (Teagasc, 21/07/2008)
      Study on the Functioning of Land Markets in the EU Member states under the Influence of Measures applied under the Common Agricultural Policy
    • The Sustainable Intensification of the Irish Dairy Sector

      Dillon, Emma Jane; Hennessy, Thia; Buckley, Cathal; Donnellan, Trevor; Hanrahan, Kevin; Moran, Brian; Ryan, Mary (Annual Conference of the Agricultural Economics Society, 2014)
      The concept of sustainability is one of the forefront issues in global agricultural production at present, given mounting pressure to increase food production in both a socially responsible and environmentally friendly way. From an Irish perspective the sustainable intensification of agriculture is of particular relevance given ambitious targets to increase milk production by 50 percent by 2020, in the context of European milk quota removal. Alongside this, environmental targets may be specified, meaning that expansion would have to be achieved in a sustainable way. To evaluate dairy farm-level sustainability a series of indicators are developed here using Teagasc National Farm Survey FADN (Farm Accountancy Data Network) data for Ireland from 2012. Three dimensions, reflecting the multifaceted nature of sustainability (economic, environmental and social) are considered. Given the environmental challenges inherent in the sustainable intensification of agriculture, it is encouraging to observe that the more intensive, top performing farms (in an economic sense) emit relatively less greenhouse gases when compared to their less intensive counterparts. Conversely, the better performing farms in economic terms tend to have higher nitrogen surplus per hectare on average. This is consistent with their higher rates of production intensity but poses a challenge in terms of sustainable expansion. That said this analysis demonstrates that the nitrogen use efficiency of milk production is positively correlated with economic performance, with more intensive farms producing relatively more milk per kg of nitrogen surplus. From a social perspective demography also tends to be correlated with economic performance. These indicators allow for the continued assessment of the sustainability status of Irish farming.