Part-time Farmers Vulnerable to Economic Slowdown

The results of a major research project which examined the contribution of off-farm income to the viability and sustainability of farm households and the productivity of farm businesses has been published. The research was co-ordinated by Mark O’Brien and Thia Hennessy of the Teagasc Rural Economy Research Centre in conjunction with FAS, the Central Bank of Ireland and Trinity College Dublin.

Part-time farming is a growing trend and the National Farm Survey (NFS) shows that the number of farm households where the spouse and/or operator is working off the farm has increased from 37% in 1995 to 58% today. The reliance on non-farm income is also increasing. In 1994 about 54% of income in farm households that engage in off-farm employment was still derived from the farm. By 2006 this had fallen to 34%. This increased reliance on non-farm income has improved the welfare of farm families. In 2001 the net income per household member in farm households lagged behind the average for rural non-farm and urban households; but by 2006 average farm household income had surpassed other household types.

However, the analysis showed that income inequality remains high among farm households. Farmers relying solely on farm income have a higher probability of poverty and deprivation.

While off-farm income is improving the welfare of the household, there may be a perception that this may impact negatively on the productivity of the farm business However, the results show that farms operated on a part-time basis are no less productive than those where the farmer does not work off the farm.

The link between off-farm income and farm investment was also explored. The results of the analysis showed that when the farmer works off the farm, the investment in the farm business usually declines. However when the farmer works full-time on the farm and the spouse works off the farm, the investment in the farm business is usually higher than when no off-farm income is present. In other words, income earned by the farmer’s spouse is often used to ease the budgetary pressure in the farm household and thus allows more of the farm profit to be used for reinvestment in the farm business.

The research showed that the increases in the number of farmers working off farm over the last number of years has been as a result of both push and pull factors. Declining farm incomes relative to non-farm incomes have pushed farmers out of full-time farming, while the buoyant macroeconomy has pulled farmers out of full-time farming. The outlook seems somewhat different from the last decade however. The push factor of declining farm incomes is likely to continue and recent policy developments such as the decoupling of direct payments from production is also likely to continue to push farmers out of full-time farming. The opportunities available to farmers are likely to be significantly curbed due to the economic slowdown. Data shows that farmers that work outside of the farm are typically employed in the agri-food sector (as contractors or in food processing), the construction sector and traditional manufacturing. These are the sectors of employment that are most vulnerable to the recent economic slowdown. Furthermore, farmers tend to be employed at the lower skilled end of the employment spectrum which further exacerbates their exposure to the economic downturn. The situation for farmers’ spouses is more optimistic with a large majority of them employed in professional and associate professional jobs in the public sector, such as teachers, nurses and administrators. These jobs are considered more “secure” in the medium term.

The conclusions of the research point towards challenging times for part-time farmers in both securing and retaining off-farm employment. Support schemes are available to farmers for both training and job seeking advice, such as the Teagasc Options Programme operated in conjunction with FAS.

The research was funded by the Department of Agriculture’s Research Stimulus fund.