Jimmy Deenihan
Question:7 Mr. Deenihan asked the Minister for Agriculture and Food the way in which farm income is determined and the average farm income; and if he will make a statement on the matter. [3956/03]
Other Questions. - Farm Incomes.
The Central Statistics Office calculates aggregate farm income – operating surplus – based on the economic accounts for agriculture. It calculates output, input and income in agriculture at national level and measures aggregate income on all farms.
My Department estimates average farm income, using statistics published by the CSO, in a number of ways. Average income per farm is determined by dividing operating surplus by the number of farm holdings. The average income per farm is not available for 2001 and 2002 as the CSO has not published data on the number of farms for these years. Average income per full-time job equivalent of family labour is calculated by dividing operating surplus by the number of family work units. The average family work unit is not available for 2001 and 2002 as the CSO has not published data on the agricultural labour input for these years. Average income per person employed is calculated by dividing operating surplus plus wages by the number of persons employed in agriculture, as estimated by the International Labour Office. Average income per person employed fell by 8% in 2002 following an increase of 14.5% in 2001.
The national farm survey produced by Teagasc uses a different definition of income to that used by the CSO. Average family farm income as calculated by the national farm survey is the difference between gross output – sales plus direct payments – and total costs, including direct costs such as feedstuffs and overhead costs, including allowance for depreciation, interest charges etc. It represents the total return to the family labour, management and capital investment in the farm business. The latest available figures for 2001 show that average farm family income, excluding off-farm income, increased by 17.3% to €15,840.
Additional InformationThis shows a cumulative increase of 43% between 1999 and 2001. This figure is based on a mixture of data from full-time and part-time farms. The average family farm income on the farms classified as full-time was €30,959. The average industrial wage, although not directly comparable, was €24,600. EUROSTAT calculates the change in farm income per full-time worker equivalent, adjusted for inflation, in each member state and in the EU as a whole. This indictor measures the change in real – adjusted for inflation – agricultural factor income, operating surplus plus wages, related to the change in total agricultural labour input in annual work units. The EUROSTAT figures show that average income per full-time job equivalent, adjusted for inflation, declined by 11.4% in Ireland in 2002.
The household budget survey is carried out by the CSO every five years and measures total household income. The latest survey was carried out in 1999-2000. It uses a narrow definition of a farm household. Rural farm households are defined as households where the principal occupation of the reference person of the household is farming or where the reference person is a retired farmer and there is at least one other household member whose main occupation is farming. As a result, farm households as published in the household budget survey represent around 88,000 households. The latest survey estimates that almost 60% of farm household income comes from off-farm sources, including off-farm employment, social welfare and other direct income. Farm household disposable income was €29,692 after tax. This compares with €30,538 for urban households and €24,545 for non-farm rural households.
Disposable income for farm households was slightly above the national average at 103% and when household size is taken into account – it should be noted that farm households were larger than others with an average of 3.56 persons – disposable income per household member is 89% of the national average.
The national anti-poverty strategy aims to reduce the number of farms and non-farm rural dwellers who are consistently poor to below 2% and, if possible, eliminate it altogether. Preliminary results from the ESRI's Living in Ireland survey shows that 3.2% of farm households, 7.2% of other rural households and 4.3% of urban households are below the 60% consistent poverty line. These different methods of examining farm income taken together are useful indicators of general trends in farm income. No single indicator could be considered to be the definitive guide to average levels of farm income.
The Minister was recently reported to have assessed the average farm income to be €45,000. The equivalent Teagasc figure for 2001 assessed the average farm income at €15,840. A farmer would need to have 90,000 gallons of milk to earn the income claimed by the Minister to represent the average. The Minister knows that less than 5% of dairy farmers have such a large milk quota and a similar percentage of beef farmers are in a position to earn such a high income. As farm incomes collapse, the Minister should be able to provide correct and accurate information. Will the Minister confirm that he believes the average farm income in 2001 to have been €45,000? If not, will he clarify that the Teagasc figure of €15,840 for 2001 is correct?
I was given a number of statistics by a number of bodies that seek to calculate farm incomes. I did not have time in my reply to mention that the national farm survey showed that the average family farm income on the farms classified as full time was €30,959, compared with the average industrial wage of €24,600. The Teagasc figures are public knowledge, as they were published in a supplement of the Irish Farmers Journal, which is widely read by Deputies who are interested in agriculture, on 23 November last. I like to compare like with like when I refer to figures. Those figures indicate that a net family farm income is on average €15,840, but that the gross average income is €45,538. I have no quibble with any of the figures, but it is important when referring to figures that one compares like with like.
Does the Minister ever have to allude to the average Irish farm income when he meets the EU Commissioner, Mr. Fischler, or attends a meeting of the Council of Ministers? If so, what figure does he give? This area is complex, as the Minister stated, and I imagine that is also the case when these matters are discussed at EU level. If the Minister does not use a specific figure, perhaps he should meet the farming organisations and the Central Statistics Office to come up with a standard calculation. It is a shame if we cannot standardise the calculation of average incomes across the EU. In view of the fact that the Minister is well read in agricultural matters, will he tell me how other countries calculate average farm incomes?
The European Union has its own method of calculating farm income through EUROSTAT, which is the normal agency used for that. EUROSTAT calculates the change in farm income per full-time worker equivalent, adjusted for inflation, in each member state and in the EU as a whole. This indicator measures the change in real agricultural factor income related to the change in total agricultural labour input. The EUROSTAT figures show that average income per full-time job equivalent, adjusted for inflation, declined by 11.4% in Ireland in 2002. I would welcome if we could all agree on some independent body to agree on this.