Sharp fall in Finnish farm income in 2005

Finnish farm income in 2005 will the lowest in years, according to provisional figures from MTT Agrifood Research Finland. Total income for the farming industry is down by 8% compared with 2004 mainly due to higher input costs.

Farm income for this year is provisionally forecast at €980 million, compared with €1.07 billion in 2004, and an average of €1.10 billion for the period 2000-2004. The farm income figure calculated by MTT indicates compensation for the labour input and capital invested by farmers in agriculture and horticulture.

While the total return on agriculture and horticulture in 2005 is expected to increase by 1% compared with 2004, this is offset by the increased cost of production. Production costs are forecast to rise by 4% in total this year. “The higher cost of petrol, in particular, has raised farmers’ bills. Fertiliser costs are also higher. Also, the costs of machinery and buildings have increased sharply this year” says Jyrki Niemi, an agricultural economist at MTT.

Crop output up, livestock down

The MTT predicts that the total return on agriculture and horticulture will reach €4.0 billion this year, and total production costs €3.0 billion. The return from market sales is estimated at €2.1 billion, which is 2% lower than a year ago. The value of publicly funded support for Finnish farmers totals €1.8 billion, up by 3% on the previous year.

In contrast to 2004, when crops were hit by poor weather conditions, harvests have been particularly abundant in 2005. The volume of crop production is up by 12% on the previous year, but prices fall by 6%, resulting in a value increase of only 2.3%. The returns from horticulture are forecast to increase by 1.1%.

Market returns from livestock production are estimated to decrease by 3.7% this year. The main decrease comes from lower milk sales which are down by 6% on the previous year due to the decline in milk prices. Prices have fallen in the poultry meat and egg production sector as well, resulting in a value decrease of 5.4% and 19%, respectively.

On the other hand, pigmeat producers continue to face higher sales due to the increase in both production quantities and producer prices. Producer prices for pigmeat are expected to rise by almost 7% this year.