• Direct Payment Measures, competitiveness, farm and rural area viability.

      Frawley, J.P.; Keeney, Mary (Teagasc, 1999-08-01)
      Direct payments are recurring non-market transfers to farmers whether they are production related or not. There are three main types: (a) compensatory allowances (headage), (b) premia and (c) agri-environmental payments. In 1998 total payments amounted to £967.3 million, up from £158.4 million in 1992. The objectives of this study were to evaluate the effectiveness of these payments in maintaining farm units, their implications for farm efficiency and competitiveness and their impact on sustaining viable farm units and rural areas. Data from the National Farm Survey shows the average level of payment was £6,670 in 1997 but varied substantially by farm size. For instance, farms over 100 ha on average received £28,207 in contrast with £3,305 for farms between 10 and 20 ha. Similarly, the distribution of payments by different farm systems shows considerable variation with tillage farmers receiving £15,760 and cattle farms receiving less than £6,000. The most significant feature, however, is the extent of the dependency of farm incomes on direct payments. For instance, on tillage and drystock farms these payments represented close to, or even exceeded the family farm income earned. This means that the income from sales are just about sufficient to cover the costs of production; the cheque in the post being the farm income. Without direct payments large segments of the farm population would operate at a loss; a situation which obviously could not be sustained. The impact of direct payments on farm efficiency and competitiveness is not so clear cut. Analysis of 1996 NFS data shows that the response on cattle farms to increased levels of direct payments was to reduce farm output. However, in terms of farm practice the dominant response was to increase stock numbers and farm inputs, such as feed and fertiliser. This latter response can be taken as adjustments to ensure sufficient stock numbers to maximise the level of payments and not necessarily a contradiction of reduced output responses. For instance the dominant anticipated response to a decoupled payment system is a reduction in farm inputs and stock numbers, a response associated with the more progressive sector of farmers. Notwithstanding the present level of these payments it is clear that the viability of farm units on most small to medium-sized drystock farms can not be assured in a farm context only. Increasingly farmers and their spouses are opting for off-farm employment to supplement their household incomes and to sustain the viability of the family farm unit. Ultimately the optimum use of family labour which is marginal or surplus to farm activities, is deployment off the farm; this clearly has a positive influence on the viability of rural areas.
    • 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).
    • The Impact of Direct Payments on Farm Income Distribution.

      Frawley, J.P.; Keeney, Mary (Teagasc, 2000-11-01)
      The switch in emphasis from market support systems in the 1992 CAP reform toward direct payments resulted in a dramatic increase in financial support terms, from £336.7 million in 1991 to £915.3 million in 1999 (current prices). The impact of this change in Irish agricultural policy was to increase substantially the dependency of farmers, with the exception of dairy farmers, on the ‘cheque in the post’ for a farm income. It is the impact of these changes on the distribution of farm income which is of concern in this study. In line with these policy changes the proportion of average family farm income derived from the market (as opposed to direct payments) decreased from 73.3 per cent in 1993 to 37.1 per cent in 1997. At the same time the corresponding proportions for direct payments increased from 26.7 per cent to 62.9 per cent. Analysis of the distribution of family farm income by deciles (based on FFI) and for all farms indicates a more equitable distribution of income between 1993 and 1997. This improvement in equity is attributed to the effects of direct payments on farm incomes. Analysis decomposing the individual effects of selected measures show that (i) the suckler cow premia, and (ii) the headage payments (Livestock headage payments in the Disadvantaged Areas) were the most effective measures in favouring income distribution equity. Cross compliance schemes (REPS and extensification) and the special beef premia had a more moderate effect in terms of equity while the arable aid payments contributed least to farm income equity. The market-derived income component had a high negative effect on equity of farm income distribution. The inclusion of a high proportion of dairy farmers among those with high farm incomes is a likely factor in this respect.