The Teagasc National Farm Survey shows that investment on farms, on average, was lower in 2024 than it was in 2021.

In fact, in each of the last four years, average gross investment in machinery, buildings and land improvements has been in a fairly tight range between €15,000 and €17,000, which doesn’t reflect the huge variation in farm incomes across the period.

This is in contrast to the 2018–2021 period which saw investment move higher as incomes rose. In trying to figure out what has caused this flat-lining in investment, there are several factors which can be looked at.

The volatility in input costs and prices received for goods produced since 2022 has been huge, as farm income data shows.

It might seem logical that farmers would invest more in good years, but as investments take time to provide a return, it will only make sense to invest when there is some certainty over the outlook for incomes. With that absent, investment decisions are more likely to be put off.

The age profile of farmers is also likely to be a factor. Younger farmers are much more likely to commit to significant investment in their operations as they will have many more years of farming to get a return. An older farmer, particularly those passed retirement age, may be less interested in expanding for the future.

Finally, there is the uncertainty over the path of future regulation. A lack of clarity over the nitrates derogation will certainly weigh on decisions to spend money now.

As the survey makes clear, it is dairying that makes up the lion’s share of gross investment spending on farms, with the sector’s spending accounting for 51% of investments last year. Tillage is a distant second, with 80% of the investment there in machinery.

When it comes to indebtedness, 64% of farms have no farm-related debt, and the average owed is €81,000. In 2021, 61% of farms were debt free, and those that owed money had average debt of €69,300.