Irish farm incomes have increased significantly this year, with the operating surplus rising almost 20% to 2.7bn (1.8bn), according to first estimates from the Central Statistics Office in Cork.

But the substantial rise is almost entirely due to the introduction of the new single farm payment, which has been paid on top of the production-linked subsidies that went out to farmers earlier in the year.

As a result, net subsidies in 2005 came to 2.1bn (1.4bn) compared with 1.5bn (1bn) last year.

“The increase in the 2005 figure is a result of a carry forward of over 600m (408m) of 2004 CAP direct payments into this year,” said Irish Farmers’ Association president John Dillon.

“In addition, it is projected that 85%-90% of this year’s single farm payment will be paid out before the end of December.”

Farm output values dropped by 3.5% to 4.8bn (3.3bn), primarily due to a 5.7% drop in milk price and volume, a 4% fall in cattle slaughterings and a 10% decrease in sheep values.

But input costs were also lower, notably feed.