It was the first year output was uncoupled from EU support, writes Seán Mac Connell, Agriculture Correspondent
In years to come, the Irish farming community will remember 2005 as a remarkable year.
What was to have been a new beginning for the industry will come to be seen as an ending for many of our smaller and older farmers who are likely to leave the industry completely, leaving the fields clear for larger operators.
The smaller operators will not go away, of course, but under the new system which was negotiated as part of the mid-term review of the Common Agricultural Policy, they will no longer be required to keep animals or sow crops to draw down the cheque in the post.
Last year, that cheque, which was paid over to the 130,000 farmers, was worth €1.6 billion. For receiving that, they must merely keep their land in good agricultural order.
The reform of the Cap with the decoupling of the supports from production has already brought major changes in the system of production in the country. There has already been a contraction of the national cattle, pig and sheep flocks and a drop in the tillage acreage.
An Bord Bia, the Irish Food Board, reported that the cattle herd had declined by 88,000 or 3 per cent in anticipation of the decoupling venture. The number of herds of cattle had also dropped from 123,526 herds at the end of 2003 to 121,921 at the end of 2004.
That pattern seems to have accelerated over last year, as was revealed in the latest slaughter figures from the meat plants. These show an overall decline of 6.5 per cent in the number of cattle being processed at export plants to 1,527,518 cattle.
The largest decline - 9.6 per cent - was in the heifer numbers, but there was also a 9 per cent drop in the number of bullocks slaughtered, 752,171.
The Central Statistics Office issued provisional livestock figures in June last which indicated lower livestock rates in the first six months of the year in all but the beef-breeding herd.
Dairy cow numbers fell by 38,900 head to 1,117,200 head, a drop of 3.4 per cent, but suckler or beef-producing cow numbers rose by 24,000 to 1,231,000, an increase of 2 per cent.
The number of breeding heifers on suckler farms also rose, increasing by 1,300 head to 140,900.
This could be because it is possible to work off-farm and keep beef cattle or sheep, but this is not the case in dairying, the most lucrative corner of farming just now.
Meanwhile, the number of dairy heifer replacements on farms in June fell by 2,000 to 227,500 head, suggesting the dairy cow herd will get even smaller.
The fall in dairy cow numbers was not unexpected but will not alarm suppliers of feed and fertiliser as it will not have major implications for sales because the national quota of 1.1 billion gallons will continue to be filled.
The fall in numbers reflects small milk producers quitting and bigger producers increasing output from their existing herds.
The CSO census confirmed that the decline in breeding sheep numbers was continuing. Numbers of breeding sheep in June 2005 stood at 3.36 million compared with 3.67 million a year before, a drop of 306,800 or just over 8 per cent
Total cereal area was down by more than a third to 275,900 hectares. However, some observers feel this was overstated because of difficulty in tracking use of home-saved cereal seed.
There was a prediction that there would be only 10,000 commercial farmers in 2025, but while they see more opportunities in what is happening now than in the past, there will most certainly be a major exodus from farming as a full-time occupation in the next decade.
The latest figures available from Teagasc, the agriculture and food development authority, said that EU and national subsidies were 86 per cent of family farm income last year.
In other words, without it, farmers who wanted to remain full-time on their farms could not do so unless they were being supported from Brussels.
Teagasc said that approximately 40 per cent of all farms had an income from farming of less than €6,500 and on 50 per cent of these farms, the farmer held an off-farm job.
Only 10 per cent of farms in 2004 had a family farm income exceeding €40,000, with 11 per cent having family farm income between €25,000 and €40,000.
On 52 per cent of all farms, the farmer or partner or spouse had an off-farm job compared to 48 per cent and 50 per cent in 2002 and 2003 respectively. On 36 per cent of farms, a job was held by the farmer, with the highest incidence of off-farm employment occurring in the dry stock, non-dairy systems.
Overall, on 78 per cent of farms the farmer and/or spouse had some source of off-farm income, be it from employment, pension or social assistance.
As the year drew to a close, the CSO reported that on a declining agricultural output, the operating surplus for farmers from their farms this year was almost 20 per cent. However, this masks the reality of fall in the volume of goods yielded by the sector of 4 per cent.
This was nearly 1 per cent in cattle output, 10 per cent in in the value of sheep output, milk fell both in volume and value by 5.7 per cent, and in cereals the value of output decreased by 26 per cent as a result of a drop in production.
With an increase in the net value of subsidies on production increasing from €594 million in 2004 to €1.6 billion this year, the percentage of family farm income coming in the cheque from Brussels this year will certainly raise an urban eyebrow or two.
In fact, that is one of the greatest difficulties facing the farming sector as we draw further away from the decoupling decision.
Ireland and Europe's farmers are going to find it difficult to defend the fact they are literally getting money for producing nothing in the years ahead.