Farm incomes across Kilkenny could be devastated in the wake of the coronavirus crisis, an economic report forecasts.
The Teagasc economic impact of Covid-19 report predicts a worst case scenario in some sectors that could see an income drop of 78%, compared to what was predicted pre-coronavirus.
The analysis finds that the beef sector is set to be worst affected. The scenario impacts on average family farm income range from a decline of 39% to a decline of 78% under the most extreme scenario examined.
A large drop in income on sheep farms is also anticipated. The projected decline in dairy farm income in 2020 ranges from 21% to as much as 49%. Tillage farm incomes are not anticipated to be affected to the same degree.
The report concludes that the total income reduction in Irish agriculture in 2020, as a result of the Covid-19 pandemic, could range from €0.7 billion to as much as €1.6 billion.
This study has not taken into account any government intervention to support agricultural incomes.
The lockdown measures have not had any significant impact on the capacity of most farmers to engage in production, since, with the exception of horticulture, most farm labour is provided by the farm family.
Unlike many other sectors, farming has been able to continue during the lockdown, maintaining essential food supplies. However, with the closure of restaurants, bars, hotels and work canteens, there has been a steep drop in demand in the food service sector.
Demand has increased from supermarkets, due to the upsurge in home consumption, but this has not been sufficient to offset reductions in food service demand.
Teagasc says “agricultural commodity prices are already in decline due to the protracted period of reduced demand that has resulted from the Covid-19 restrictions.
“The nature of farming requires farmers to make production decisions, months, and in some cases years, before the resulting output is available for the food chain. Production decisions for 2020 were made in advance of the current emergency, leaving farmers with little scope to adjust their production volume and cost base in response to the dramatic Covid-19 driven fall off in demand. Declines in farm gate prices of cattle and milk are already evident.”